If you were to instead find a compass, you would say…”Great, now I know which way is north. Now if I only knew which direction I needed to go.” If you came across a trail with a sign that says…
” Congratulations! You have made it to the 5 mile point of ’15 mile’ trail. There will be another sign in 5 miles.”
… You would still be missing a key piece of information. Which way do I go? 5 miles the wrong way deeper into the woods to find the 10 mile marker? or… 5 miles the right way to get out of this woods!
How many times have you typed in a location in Google maps and when it brought up the location it was so zoomed in that you immediately had to zoom out to find out where you were on the map? You needed to find out where this place is in relation to some other location that you are familiar with. Pasadena Texas is a lot easier to find on a map if you know that it’s a suburb of Houston.
With the GPS or on a map, The way that we figure out where we are located is with coordinates. We use latitude and longitude. On a price chart we also have two axes to use. Price and time. When we look at a price chart we immediately know our ever changing location on the”map”. We can see the current bid price and the current time. The smaller the timeframe the greater the detail as to the time. However, changing the time frame does not change the price. In other words we can get our time down to the high precision and resolution of one minute. But the price… is the price. And it’s constantly changing. Sometimes quickly, sometimes painstakingly slowly.
Side Note: One of the problems that are involved with using renko charts is that they compress and expand and therefore distort the time dimension. This makes it impossible to see how quickly or how slowly the market is moving. The speed at which prices change is important to me because it gives me a clue as to the emotional state of the “collective consciousness” of the market. Did it slowly creep into this area of previous resistance or is it running like a runaway team of horses headlong into a box canyon? For this reason I prefer to use normal candlestick or bar charts although almost all of my trading is based on pure price action.