Mega Bars are smooth, but what is it that makes them particularly good is their 5 tick range. Crude Oil has a 10 tick structure, meaning there are 10 ticks in each $100 move in the market, or $10 per tick.
Because of this structure, a large percentage of the time, day traders will place orders according to this structure. For this reason we use half that for a continuation bar and all of it for a reversal bar. Due to the fact the bars are referenced to the close of the previous bar, there may be tails on the bars that can make the range larger overall.
Most of the time, where participation in the market is more-or-less constant, meaning there are not a lot of new participants coming into or out of the market (who may not be day traders), we get a consistency of this range behavior in live market situations. When participation is changing, for example, around report times and where heavily capitalized traders may be entering the market, the ranges are not as likely to be respected. Another word for this might be non-directional volatility. Another word for these better capitalized traders is "Other Time-Frame" participants. Sometimes simply called "OTF" OTF coming on the scene can change the market a lot and so awareness of their presence can be part of an overall prudent day trading strategy.
During these times you might see an increase in overall volume (on the SmartVolumeStats tool) with no corresponding increase in overall range expansion on the Mega Bars. There are not typically ideal situations in our live trading room as mentioned. The nice thing is, you can easily see this on the Mega Bars chart and with the SmartVolume Stats (from IndicatorSmart). This can help to keep you out of choppy markets and into ones that are moving.
When day trading crude oil successfully, it is important to try to trade into markets that have directional intent, and these kinds of observations discussed above can help us to do this and help us to have an overall winning strategy.
Being aware of the relationship of the range of your bar and the volume is a key point for crude oil day traders to be aware of when using a range based bars in a live trading situation and you may hear it referred to in the live room as "respecting the range of the bar" and is part of an overall winning crude oil live day trading strategy.
That's all for now...