XLTools Update

Scale Finder

One of the most fequently asked questions I get from traders new to graphical overlay techniques is: how do I choose a chart scale? Unfortunately there is no easy answer. When we scale our chart, in essence, what we are attempting to do is find the conversion factor for our market and timeframe that makes price equivalent to time. When we have found the correct scale, even the basic geometric forms: circle, square and triangle can be used as a timing tool. Using a square on a properly scaled chart is a valid visual method for comparing price and time. Similarly an equilateral triangle which is derived directly from the sacred geometry building block known as the vesica pices, will when properly lined up with pivots, indicate future turning points with uncanny precision. Try it! (Cubestm in XLAngles is based on this concept).

To scale their chart, normally one would adjust the number of bars and points displayed so that when a circle, triangle or square is overlaid, price-time symmetry is observed, that is provided their software is capable of doing that (most are not). For instance a low pivot might occur at the lower left corner of a square and the subsequent high pivot occurs at or near the upper right corner. The diagonal drawn between the lower left and upper right points of the square is what WD Gann called a 1x1 or 45 degree angle. XLTrader takes a slightly different approach to the problem of scaling.

Instead of worrying about how many bars (and or points) are displayed, in XLTrader the objects themselves are mathematically scaled. However nothing prevents you from adjusting the number of bars and points displayed as you see fit. In fact you may want try that then use the Excel drawing tools to experiment with the 2D object overlays. Regardless, nearly every geometric overlay in the XLTrader collection asks you to specify the scale and therefore you must know what to put there. If your overlay is not properly scaled you will not find success with these techniques.

Scale Finder first asks you to specify two pivots (i.e. a high and a low or vice versa). Based on the measured slope of the line defined by the two points selected, scale finder suggests three possible scale factors. Which scale factor you ultimately choose will depend on whether on you suspect the points lie on a 2x1, 1x1 or 1x2 Gann angle. The algorithm rounds to the nearest whole number reflecting a personal preference for single numeral scale factors and multiples of ten there of. The proposed scale factors are just a suggestion, a starting point... you still need to discover for yourself what works best with your market.