If we were to dig into what these two are to their fullest depths, we wouldn´t see the light of day. So, let´s keep it as short as possible without loosing perspective and at the same time not going too far the rabbit hole.
A fair warning, when dealing with charts and indicators one can follow the white rabbit down its maze to such a degree that one loses direction altogether.
It´s not so much about knowing many things, but knowing the right things. But in order to establish which the right things are we will need to first observe many things.
And the “s” in things does some heavy lifting, as the probability of it being one thing that dictates, is practically zero… not observed in any other complex systems either.
Charts
Basically the scale of the thing we´re measuring. But uses time as well, to show how price evolved over time. Not just up or down like in a thermometer measuring temperature. How we look at the charts changes , due to the fact that we can change what time resolution (time frame) we want to use when observing. Charts are basically a blunt map. It´s when we try to interpret the map we step into analytics and indicators.
Well, that was quick and painless. But next part isn´t going to be as smooth, due to it actually containing the thing we´re trying to do. Understand where and when price changes direction or structural changes occurs.
That´s where indicators step in and earn their place, on top of the charts.
Indicators
Are mathematical tools that use the thing in front of us, price or similar data on the charts in different ways. In attempts on transforming movements into interpretable metrics that contains behavior we can act on, or not act on.
Smooth wasn´t it? Sounds easy on surface, but if it truly were this easy then markets wouldn´t exist. But indicators are mandatory in any system if you seek to better understand how that system operates. The key is to figure out what things we should or can calculate on, what indicators we need to have in order to read the charts clearer.
Indicator building and what math is used and how its used, is a very hot potato among those building them. We get a complete circus of opinions on which math is correct and why others are wrong.
One field asks for rigor that demands higher level mathematical models, and is correct in their perspective.
Another field opposes and claim that such rigor and advanced mathematical models solves a different thing than what we seek to solve.
In reality, it´s most likely so that everyone is right… from their own perspective…
The higher mathematical rigor solves problems at institutional scale, demanding technical complexity and capital that retail participants simply don’t have access to. Realytica sits closer to retail needs, by decision. Not because the higher level spaces are wrong, but because they’re solving different problems than most traders actually face in their trading endeavor.
Simply put: The right tools for the job, not the most advanced.
So, what indicators are the appropriate ones?
The Realytica approach is that no indicator alone solves everything. An indicator simply measures what its designed to measure. It doesn´t dicate anything in isolation. But there needs to be a selection on what matters. The choice is to focus on the thing we see, price. The footprints left behind from large participant interaction.
With the below core variables as important in a attempt to define what we´re looking at:
Anchoring
Volatility
Averages
Structures
Deviations
Timeframes
Anchoring
MORPH Structure , MORPH Channels and more, utilizes this by shaping the indicator and its placement upon events as they occur. At points in time that by manual or automation is thought to hold higher importance.
Volatility
We need to understand price movements in their current space. Due to price movements in 1956 isn´t the same as in 2026. 10 points up or down in 1956 isn´t 10 points up or down in 2026. Thus we need to normalize price movements to a more local relationship. Usually done by using ATR (Average True Range) normalizations.
Most Realytica Indicators uses normalization in one way or another. Most commonly by using ATR, but an ATR lenght derived from extensive price movement analysis, not from assumed lengths.
Averages
To understand a value we often use averages in a attempt to quicker assess how the value is behaving right now. An average answers this quickly and bluntly. It´s quick and responsive, more local and should be interpreted as such.
Realytica MORPH core script operates in this space. But not using conventional moving averages. But highly morphed ones, built from the changes in it´s own sub metrics, like volatility and similar. In a attempt to zoom in what average is the dominant one and how it might be defined.
Structures
Is needed to understand the space price is operating in. It´s like a box price travels inside. Where the understanding of the structure aids in probability calculations on where reactions are. Where these structual events manifests is the key to the structual build, usually by anchoring.
Realytica MORPH Structure operates in this space. Building price structures upon events as they unfold. And we get a better understanding of what space price actually is operating in on a more local perspective.
Deviations
Price or any metric deviating from a average or similar holds useful information. Deviations is quick to expose when a metric is acting out of the ordinary. Which needs attention. But it´s crucial to understand that large deviations doesn´t demand it´s resolved quickly. Or even resolved at all… (theoretically). In practice deviations do eventually resolve in liquid markets.
Realytica MORPH uses deviation barriers in a attempt to define how much price deviates. Not from static measures of deviation. But from deviation barriers themselves being subjected to the volatility and sub metrics from the average itself. Thus they evolve in correlation with price movements.
Timeframes
The lens which shapes the appearence of all the above. Price can be seen as going lower on a shorter timeframe, but hardly affects the going up on a larger timeframe. So, which one is it? Is there one correct one? That defines everything in a perfect descriptive sense, who knows… Can we define what a human will do by looking at what we did today? By what we did on a yearly basis? You tell me… it´s intriguing to think there is one though.
Realytica stance is a convenice one on timeframes. Sure, we would like to use all, but that requires computational power and cross analysis to such a degree that it almost becomes non operational. So, by convenience the stance is that a higher timeframe is needed to show deep structural bias, like weekly. Along with a set of lower timeframes, like daily and hourly. To form a understanding of the space we´re in on a more structural perspective.
Timeframes is one of those metrics that´s also linked to the trader himself in another way. Where risk awareness, capital and strategy, will shape the selection of timeframes to use. Not the other way around.
What can we conclude about charts and indicators?
- That indicators are useful whether we like it or not, or we couldn´t understand a single metric.
- Any indicator in isolation won´t tell the whole truth.
- Understanding a indicator comes from looking at the historical behavior in the indicator.
- Indicators doesn´t dictate, they measure.
- Confluence is important. Which indicators in combination defines what we look at.
Correctomundo?
Michael Burry was right about the subprime mortgage collapse.
Structurally, analytically, fundamentally correct. He held through margin calls, investor panic and months of devastating metrics against him, before the trade worked.
Most retail traders in the same position would have been wiped out before being proven right. Not because their analysis was wrong in any way. But because their capital couldn’t survive the wait from being correct and the market agreeing.
Structural tools show you where significant levels are and what price behavior around them implies after analysis. They don’t tell you when the market will decide to agree with the structure offered.
“Markets can remain irrational longer than you can remain solvent.”
―
Being right about where matters. Being right about when is a different question. And being right about both still requires the capital to stay in the room long enough for the market to confirm it. The tools help with the first question. The rest takes ongoing analysis.
There is a important thing to be aware of when entering markets. We can do all sorts of correct math and strategies, based on multiple factors like price. But there´s still variables not even accessible to calculate on. And it´s intent. What the intent was behind the actions large participants expressed, that lead to the price footprints in front of us in the charts.
Learning curve involved when heading into markets and trading exists. But as you move along your path, you will hopefully build a more grounded perspective on what is in front of you. And most crucially, you´re more self propelled.
As stated in the beginning of this page. One can dig almost endlessly deep into each subject. The white rabbit can take you on a wild goose (rabbit) chase as well. How deep you go should be limited by what your purpose actually is. Solving the deeper market as an entity, or solving what’s important to your own endeavor into markets.
