Q Smarter Bars

Introduction

Every bar contains information. We miss a lot of valuable information because we filter these bars by time, variance or some other method. There are probably no perfect way to build our bars so the best solution would be to allow our bars to provide us with all the valuable information that we need in a neat, compact and informative manner.

AN INFORMATION SHORTAGE

Bars tells us the Open, High, Low and Close only. This is important information but we need to include other more valuable information like Volume, Trend factors, Momentum , Volume imbalances, price – volume imbalances and intra-bar support – resistance as well.

In essence the market moves between periods of buying and selling, yes, but also between periods of momentum (trend) and periods of reversion (reversals/ support / resistance) and then back again to momentum…

We have created this indicator to address this information shortage by looking inside every bar, analyzing the Price/Volume metrics and defining each bar in terms of Volume, Trend factors, Momentum , Volume imbalances, price – volume imbalances and intra-bar support – resistance.

This to gives us a final answer: Reversion or Momentum?

With this answer we feel far better equipped to understand the micro picture as well as the big picture in the market.

It helps us make better decisions as to when and where to enter and exit. To confirm break-outs, reversals and trend continuations.

Barring some slight deviations, we work with a basic color scheme of Red and Lime for Momentum, Orange and Blue for Reversion. This helps visualize the flow of Rev and Mom over time.

4 WAYS TO READ THE MARKET BETTER

We fill bar colors with solid colors to show significant volume according to the color scheme mentioned above.

We color the bar outline to show significant trend and volume.

The wicks are colored according to the color scheme based on balance of volume and trend.

This really gives us a very clear picture of the market with only the necessary information. The shifts and intensity of colors makes seeing the next trade far easier than with standard bars. The fact that insignificant bars “fade away” helps us see the real picture and filter out the noise of the market.

1) TREND, MOMENTUM AND VOLATILITY ( OUTLINE COLOR)

This indie measures and compares the trend, momentum and volatility to previous bars and determines whether it is significant or not.

Bar Outline Color:

• The outline color of the bars changes to Pink (Selling) and Lime (Buying) when there was a significant increase in the trend, momentum and volatility. ( Momentum)
• When the opposite occurs and the trend, momentum and volatility decreases the bar outline color changes to Blue (Buying) and Orange (Selling). (Reversion)

What it means for trading:

• This really helps to see the flow in the market in terms of accumulation and distribution. The shifts in color adds invaluable information to how we experience the market.
• We can clearly see how the market shifts from reversion to momentum and back.
• Long periods of reversion (Blue and Orange) is often followed by a break-out of this range and leads to momentum (Pink and Lime). The longer these consolidation periods the better.
• We can also clearly see areas of a pause in the trend (momentum) followed by a continuation of the same trend .

2) VOLUME ( BAR FILL COLOR)

This indicator identifies the smart money volume in each bar, compares it to previous bars and determines the following:

• The bar volume`s significance.
• Filters the Smart Money buying from the rest.
• Determines if the volume traded was momentum volume which could lead to a continuation of the trend or reversion volume.
• This reversion volume creates areas of support and resistance that very often repeats itself in the future
• It also uses this volume to determine the the intra-bar support and resistance levels.
• It calculates and plots the intra-bar VWAP.

Bars are filled with Red or Green (Up) and Blue or Orange (Down) when significant smart money volume was traded in the bar.

Bar Colors:

• Green and Red when the volume traded was accompanied by or generated momentum.
• Blue and Orange when the volume traded experienced or created support or resistance.

What it means for trading;

• Support and resistances are often created by volume and Break-outs are usually preceded by or accompanied by significant increases in volume and momentum making these bars are very informative.
• Momentum vs. Reversion.

3) VOLUME – BUYING / SELLING BALANCE ( WICK COLOR )

Q Smart Bars also measures the balance between buying volume and selling volume intra-bar along with the balance of the intra-bar momentum by changing the colors of the wicks.

These balances can agree with the trend and momentum or not. Reversion or Momentum.

These values are also tested for significance and compared to previous bars.

Wick Colors:

• The wider and longer the wick is the more significant the Buy/Sell imbalance is.
• Lime wicks for Upward momentum buying – The trend is up and the buying outpaced the selling.
• Pink wicks for downward momentum selling – The trend is down and the selling outpaced the buying.
• Blue wicks for upward reversion buying – The trend was up but the selling outpaced the buying.
• Orange wicks for downward reversion selling – The trend was down but the buying outpaced the selling.

What it means for trading:

• Shifts in Buying/Selling pressure – The wicks shows us clear shifts. These shifts are more significant after longer periods of prolonged buying and selling.
• Significant B/S imbalances – These imbalances clearly shows us continued or increased momentum in a trend ( Pink and Lime) .
• They also show us when the volume imbalance indicates reversion in a trend that may lead to a reversal in the trend ( Blue and Orange)
• Confirmation of break – outs and reversals – These imbalances and shifts within them helps s lot with confirming a break-out or a reversal point.
• They also shows us when a trend is getting exhausted.
• Momentum vs. Reversion.

4) NO INTEREST – EMPTY WHITE BARS

Another opposite in the markets is the the opposite of significance which is complete insignificance. The market sways between metrics of significance and that of insignificance. Like Yin and Yang.

What it means for trading:

• The periods of insignificance are usualy followed by periods of significance thus this can bee seen as the “quite before the storm”.
• Reversals are very likely after these bars and often break-outs occur as well as there is no support or resistance at the level left.
• During time of low Volume and trend etc. These bars are the bars which are more likely to give us good information.

PUTTING IT ALL TOGETHER

We have created the slide show below to demonstrate how effective these bars are at explaining pretty much everything that is happening in the market. If we can correctly understand what is happening in the market then we can trade profitably. The slideshow flows through a full day of trading.

Key Take-Aways

• Volume plays an absolutely crucial role in determining the market structure. These bars accurately describes the flow of money in the market.
• These volume bars instantly and very accurately show where support and resistance is created. These support and resistance levels are very often Not pivot points but rather levels where the Smart money were active.
• Volume bars also show momentum accurately. Many false breaks can be avoided if we follow the money ( volume bars ).
• Volume bars repeat at significant previous SR levels. confirming there validity.
• The drawing of Trendlines and breaks of trendlines are much more accurate with these bars.
• The balance between buying and selling volume is crucial in analysing the market.
• Momentum tends to lead to more momentum.
• Bars are best studied in combination of previous bars. This gives us good context of where the market is at.
• Shifts in these market dynamics like buying volume to selling volume, or low volume to high volume signals shifts in the market structure.
• These bars highlights areas of consolidation and trending, accumulation and distribution.

Is it not time that you start trading more intelligently with a bars type indicator that truly informs you and guides you to better trading decisions.

•  Lifetime License – $340.00

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