Price-Driven Synthetic Bars for Earlier Trading Signals

Summary

Synthetic bars use price movement instead of elapsed time to determine when a bar closes. A user sets a bar-height threshold, and the indicator processes incoming ticks: the first tick sets the open, later ticks update the high or low, and the bar closes when the high-to-low range exceeds the threshold. The resulting bars retain the familiar open, high, low, and close format, allowing conventional indicators to be applied while avoiding fixed time-based bar completion.

The article presents synthetic bars as a way to form signals sooner during sharp moves and illustrates the idea with moving average crossovers. It describes generating an offline chart from one-minute data, while noting that Expert Advisors do not operate directly on that chart. Bar height strongly affects the resulting signals and acts as an additional strategy parameter. The method also requires continuous monitoring, and price gaps can create attractive-looking signals after the opportunity to trade has passed.

Key ideas

• Synthetic bars close when price traverses a preset range, regardless of how much time has passed.
• Each bar’s open is set by its first tick, and its close is at its high or low boundary.
• The familiar bar format permits use of standard technical indicators on synthetic charts.
• The bar-height threshold changes signal behavior and requires deliberate selection.
• Rapid gaps can make displayed signals untradeable, and the chart requires continuous monitoring.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.