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Good Chart Selection by Roger Felton

Site Administrator | July 10, 2012

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Special thanks to this Wednesday's Guest Speaker, Roger Felton of Felton Trading, for providing today's guest post.  Be sure to join Roger and learn how to get your trading back on track.  You can REGISTER HERE.

As a Method Developer, my goal has been to create market entries that enable traders to find profitable opportunities in trending, sideways, choppy or even congested market conditions. The best way I have found to accomplish this is in my chart type selection. This can be demonstrated in a simple illustration of some various charts. I will include some of the signal types that I use (many that I've created) so that you can see the tremendous difference it makes by the chart type you choose. In cases where the chart type I needed didn't exist, I created it.

Chart A is a 15-min in gold (GC). A few signals were generated and easily filtered by some "with trend" settings but the market itself wasn't smooth. It would go from choppy/congested to violent volatility and then into a coma. Tradable yes, but not much fun. Chart B is a 987 Tick chart showing the same day's activity in GC. Although Tick charts are generally more "in tune" with what the markets are doing than time-based charts, this example shows little improvement with so-so entries and sloppy turns. Same market and time, In Chart C, we have the Felton Renko Universal Supreme bars. The trader can easily see that, when Price changes direction, it tends to stay in that direction...especially when going with a trend. Notice the computer generated signals that warn and fire at most of the turns. Once we started putting Price in a "channel", of sorts, with some structural rules, we began to see true price direction and great profit opportunities more clearly than ever before. Any type of Renko bar can easily be created simply by changing a couple of inputs.

Knocks out the noise nicely, doesn't it? Profit potential of 10 to 20 ticks or more can often be taken counter trend, also. Weak turns can often be spotted and filtered for avoidance. The chart type is unique in that the OHLC of every bar is shown in real time. We can easily use this powerful Renko chart to not only convert it into any other type of Renko Bar, but we can also perform complete back testing of signal entries, various filters, and any exit strategy.

Roger Felton is our guest speaker this Wednesday at 4:30 pm eastern time.  He will be covering "How to Get Back on Track - Improved Trading in 60 minutes"  - REGISTER FOR THIS FREE CLASS

Cheers,

The TradingPub
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Risk Disclaimer: Past performance is not indicative of future results. Futures trading involves substantial financial risk. Views of guest commentators do not represent those of TradingPub.com. Article intended for educational purposes only and not meant in anyway as a solicitation to buy or sell certain securities. Please consult your personal financial adviser before using this information for your own trading purposes.