Risk Disclosure

Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. View full risk disclosure.

Bar Direction Solver

The Bar Direction solver gives a favorable output value when the bar has closed up when evaluating the Long side and closed down when evaluating the Short side. Bars must be at least as large as the Minimum Bar Size in range before being counted.

Parameters

This section is common to all solvers.  A description can be found here.
This section is common to all solvers.  A description can be found here.

Each bar’s opening price to closing price range must be equal or greater than this value to generate an output other than 0.

Measurement
Sets the type of measurement to calculate the Minimum Bar Size.  Possible measurements are Points, Ticks, Renko Bricks, & ATRs.

Selects the output behavior.  Percent is typically used for fuzzy logic based system.  Where ‘All or Nothing’ is most commonly used.  All or Nothing is better suited for true or false systems (non fuzzy logic).

Percent
Outputs a percentage value based on the number of bars that satisfies the condition in the required direction.  I.E. If the Number Bars value is 4, each bar meeting the Minimum Bar Size will increment the output value by 1/4 or 25%(0.25).  The 4th bar will output a value of 1 (100%).

All or Nothing
Outputs a logical value of 1 when the bars in Number of Bars satisfies the condition of all being in the same direction.  Until the Number of Bars are all in the same  direction, this setting will output a value of 0.

The number of bars, starting at Start Bars Ago, that must satisfy this condition.

The number of bars back to start analyzing this test condition.

Video Tutorial

Examples

Example 1: The Basics

This demonstrates the basic function of the Bar Direction solver by outputting a value in the direction of the bar.

  • Add the Bar Direction Solver, and use the default setting

As is seen in the chart, an output of 1 indicates price moved higher, and an output of -1 indicates price moved lower.

Example 2: Strength On Volume

In this example we want to detect strong price movement with a certain maximum amount of volume or less. Normally traders are looking for strong price moves with high volume to note conviction behind the move. However, this example is looking for a strong price move with a fixed amount of volume, which could denote lack of conviction or a “fake-out”. The chart uses a Volume bar which limits the volume per bar, so only the price movement needs to be analyzed. The price movement wanted is a least 5 ticks per bar for 3 bars in a row.

  • Add the Bar Direction Solver
  • Set the Minimum Bar Size to 5 Ticks
  • Set Mode to “All or Nothing”
  • Set Number Bars to 3

As can be seen in this example, a “fake-out” did not occur, but price did rest a while after those detected moves before continuing.

Applying to Another Timeframe

Now let’s apply the same test to a 200 Tick chart that we started out with in example 1.

  • Change the charts Data Series to 200 Tick
  • Open the BH template from the Indicator panel
  • Click the Chart button to add a secondary data series
  • change the 1 Min chart to a 1500 Volume chart
  • Add a Bar Direction Solver after the 1500 Volume chart
  • Set the Minimum Bar Size to 5 Ticks
  • Set Mode to “All or Nothing”
  • Set Number Bars to 3

When you compare the Tick chart below with the Volume chart above, you can see the “signals” line up.