TradeStation Help

Kase Bar Chart

Kase Bars are equal True Range bars previously known as Kase Universal Bars. The Kase Bar method creates bars with a true range based on a user's specified Target Range value by using only real price data. Kase Bar charts look like a traditional bar or candlestick chart with the exception that the size of each bar is dictated by a Target Range value; all the bars are approximately the same size (range).

Kase Bars have two main advantages over other "equal range" bar methods.

1. Kase bars are based on equal true ranges, which takes into account gaps that may occur between the previous bar's close and the current high or low into the bar's range; as opposed to other "equal range" bar methods that only account for the high-low range and leave out any gaps.
2. Kase Bars are built using only real data.  If there are any gaps in the underlying data; such gaps are shown as opposed to filling the gap by creating synthetic bars. If the minimum range between two ticks exceed the target range, the actual minimum range is shown. This is in opposition to other "equal range" bar methods, which force bars to be an exact size using synthetic data.
   
   For example, if two sequential prices were $10.10 and $10.20, Kase Bars using a Target Range of .05 (5-cents) will not insert synthetic data, but instead will generate a 10-cent bar since that is as close to the target range as one can get with the real data. Other "equal range" would have to insert a synthetic tick at $10.15, breaking up the 10-cent move into two bars, each with a range of 5-cents.

Benefits gained in using Kase Bars:

• Real market gaps are displayed; such as breakaway, measuring or midpoint, and exhaustion gaps (which are important) in anticipating market behavior, as well as patterns such as morning and evening stars and island reversals.
• Alerts or orders produced by using analysis techniques or strategies will be generated by real data (actual prices traded in the market). This will provide greater reliability and accuracy of generated orders which is a reflection of real situations and opportunities.
• Because gaps are not filled-in and price moves are not broken up using synthetic data, the real risk in the market which is proportional to the real range of what actually traded, is clearly visible.

As you can see, the following Kase Bar chart consolidates the activity into fewer bars than the 60-minute chart.  

How a Kase Bar is Built

As prices update, the True Range of the data is evaluated. Once the specified Target Range is met, the current Kase Bar is closed-out and a new Kase Bar is opened.

Kase Bar Interval Settings

The target range defines the approximate price range, and must be greater than the minimum move. There are a number of ways that one can specify a Target Range value:

• As a guideline, the Target Range should be no less than three times the average difference between closes.  For example, if you have the following prices on a 1-tick chart, "10 - 12 - 14 - 12 - 14 - 16", the average tick difference is "2". Thus, the minimum range one would use is "6".
• Set up the normal time or tick volume chart you would use (15 minute, 30 minute, or 610 tick, etc). Plot the Average True Range Indicator on the chart. The value of the Average True Range Indicator provides an approximation of what the Target Range should be set to.
• Try a Target Range that seems appropriate to you. Visually, Kase Bars should mostly be approximately the same size. If there are large or frequent variations in size, it usually means that the specified Target Range is too small.
• The Interval setting defines the interval of the data used to build the Kase Bars. Kase Bars can be built using either 1 tick or 1 minute interval underlying data. There is a difference in the amount of history available between Tick and Minute-based charts. Kase Bars using a 1-tick interval provide greater precision, over a smaller range of data. Kase Bars using a 1-Minute interval reduces the precision, over a much larger range of data.

How Will Kase Bars Help Me Trade?

There are two major benefits that Kase Bars offer to trading, they are:

1. Reduction in the volatility displayed on the charts. Volatility and risk are directly related and volatility is proportional to the True Range. Therefore, the more variation there is in the True Range from bar-to-bar, the more risk there is.  
2. Cleaner signals; produced from smoother charts.

Strategy Back-testing & Automation

Strategies can be effectively back-tested on Kase Bar charts, when using either a '1 Tick' or '1 Minute' underlying interval. Automation and real-time analysis of strategies on Kase Bar charts should only be carried-out using a '1 Tick' underlying interval. For additional information on back-testing and automating strategies on Advanced Chart Types, see Advanced Chart Types - Strategy Back-Testing & Automation.

Additional Information

• When using a Kase Bar chart, multi-data charts can not be created; only one symbol can be displayed on a Chart Analysis window at a time.
• Kase Bar charts are not time-based; they are built based on price activity.  Thus,
  • The lines on the chart will not necessarily represent the specified data interval or time period.
  • Dates may not necessarily be evenly spaced across the time axis (x-axis).
• Indicators and strategies can be applied to a Kase Bar chart.
• Actual volume values are only displayed when '1 tick' is the selected interval for the Kase Bar chart. Otherwise, the 'Up Vol' value will always equal 1.

For a comprehensive list of command line commands, see Command Line References (All Commands) or Command Line Reference (Sorted by Application).

For more information on Kase Bars, ask Kase: askkase@kaseco.com.