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They help to cut out some of the noise in the market and they work best as an indicator / macro view of what is going on.
But execution of orders coming from these will surprise you and often times horrify you because by hiding the noise you are often times fooled as to where the price is actually at.
The worst use case of any type of exotic bar chart is in back testing. There are more Backtesting millionaires using exotic bar types that any other type of trading technique, style, etc. Most simulators do not handle exotic bar type well and overstate performance by a 7 digit magnitude. So be warned, if you are not hip to this already...
Happy Trading!
Ian
In the analytical world there is no such thing as art, there is only the science you know and the science you don't know. Characterizing the science you don't know as "art" is a fools game.
Hello, i was wondering if anybody was using logik ultimate renko bars or rjays renko spectrum bars in their trading,if so could you show me some chart examples of the emini s&p or the nasdaq. thank you.
ya i used Ultimate on NT8 dont have any pix but it was muuuuuuch better than the regular renko that nt8 offers. you can adjust the trend reversal and offset where the NT8 renko only lets you adjust 1 or 2 of them. so ultimate is much more versital.
I think the only way to safely use exotic bar types would be to use them as indicators to cut out the noise but still execute trades on more granular prices. So for both testing and live trading you would know full well what the prices where at any point in time, but the exotic bar type could be a secondary data point like an indicator. The failure of back-testing comes when you use the exotic bar type as your primary data series. In this case it cuts the noise so much that it only sees green when you are really red and vice versa. Simple back-testers fail miserably if you set this as your primary data series. But if you put this on a secondary data series just for analysis... You might be able to work with it.
Ian
In the analytical world there is no such thing as art, there is only the science you know and the science you don't know. Characterizing the science you don't know as "art" is a fools game.