This relationship is then presented in the form of ‘boxes’.

The vertical
element of
the box, in other words the height, is simply the high and low of the session
in terms
of price. The horizontal element is volume, which of course varies, as to
whether
this is ultra high, high, medium or low, which in turn means that the width of
each
box varies. On our chart we no longer have candles, but a series of boxes,
both
narrow and fat, tall and short which then represent the direct relationship
between
volume and price in a very visual way, but with the time element removed.
The time
element is still there, but on a separate axis below, otherwise it would be
impossible
to know where we are on the chart.
As Arms himself said:
‘if the market wore a wristwatch, it would be divided into
shares, not hours’
and indeed in some ways this sums up the concept of trading on tick based
charts
which I mentioned in an earlier chapter. After all, time is a man made
concept, and
something the markets can and do ignore. The beauty of trading on a tick
chart is
that it is the market dictating the ‘speed’ of the market. In other words, on a
tick
chart, we are trading in harmony with the market. When we move to a time
based
chart, it is we who are dictating to the market our chosen timeframe, a subtle
but
important difference. On a tick chart we trade at the speed of the market - on
a time
based chart we don’t.
This same philosophy can be applied to equivolume, which attempts to
remove the
rather ‘false’ aspect of time from the analysis, to create a purer and more
meaningful relationship between the two elements of volume and price.
Let’s take a look at how these boxes are created and what they actually tell us
about
the volume price relationship. Below is a schematic in Fig 12.10