OHLC
OPEN HIGH LOW CLOSE Known as OHLC. What a fascinating sequence of the number ??!! I see it as so chaotic but beautiful. Mesmerising and charming.
I am not lying. It is true. Let me explain to you, How?
Let us define each as its own.
OPEN
Starting with OPEN. Open can be the previous CLOSE (C), or it could be the beginning of the sequence. Let us assume that it is not a zero. And for simplicity, it is a one.
HIGH
Now HIGH (H) as it says, can be higher than or equal to OPEN (O) but can not be less than OPEN (O).
HIGH (H) >= OPEN (O)
LOW
LOW (L) as it says, can be lower than or equal to OPEN (O), but can not be greater than OPEN (O). LOW (L) can be lower than or equal to HIGH (H) but can not be greater than HIGH (H).
LOW (L) <= OPEN (O)
LOW (L) < HIGH (H) if LOW(L) = HIGH(H) than LOW(L) = OPEN(O).
CLOSE
Out of all, CLOSE (C) is the most fascinating. It can be less than or equal to HIGH (H) and greater than or equal to LOW (L). It can be less than or greater than or equal to OPEN (O). But it can not be greater than HIGH and can not be lower than LOW.
CLOSE(C) <= HIGH(H)
CLOSE(C) >= LOW(L)
CLOSE(C) = OPEN(O), CLOSE(C) > OPEN(O), CLOSE(C) < OPEN(O)
Can you see it? Now things can go very interesting from here. OHLC is always on a time series in the timestamp for the given moment. Let us say each set represents every twenty milliseconds of time-frame. Assuming that each trade takes a minimum of twenty milliseconds of the time to execute.
Now for our own sake, we do not want to establish trend; thus, we will keep out volume and bid or ask data out of the equation for now. When we closely look at the OHLC data, it tells us what happens at that moment. How it started, How high the trade went, How low it went and what happened at the end. Absolutely chaotic, yet so precise and charming.
Now think if you could build series of data for a few minutes and let me show you how quickly it becomes a lot.
1 Second = 1000 Milliseconds
20 Milliseconds = 1 set of (OHLC)
1000 Milliseconds = 50 sets of OHLC.
1 Minute = 60 Seconds
1 Minute = 300 sets of OHLC
1 Hour = 60 Minutes
1 Hour = 18000 sets of OHLC.
Wow… it’s a lot. Imagine you want to create a test data for a trading strategy or algorithm to prove that it works as expected. How would to create these large numbers of sets on the fly. And yet each set represents the precise deviation of real market data. I am currently working on something that exactly does that. And if you are looking for answers how would I do it. Let’s us chat.
Connect with me and I will get back to you.
