For a full guide to inheriting the analysis please take a look at this playlist from the Academy or this playlist from YouTube.
Inheritance is the means by which Sentient Trader receives troughs and/or peaks from higher timeframes and identifies those same troughs and peaks on lower timeframes. This enables Sentient Trader to work with the highest resolution possible, identifying cycles that go from just a few minutes in length right up to cycles 18 years long.
This article will go through a few important points and common questions about inheriting the analysis.
Inheritance is the means by which Sentient Trader receives troughs and/or peaks from higher timeframes and identifies those same troughs and peaks on lower timeframes. This enables Sentient Trader to work with the highest resolution possible, identifying cycles that go from just a few minutes in length right up to cycles 18 years long.
This article will go through a few important points and common questions about inheriting the analysis.
How much data do my intraday charts need?
While an EOD chart almost invariably benefits from more data, intraday charts inherit their analysis information so they don't benefit from more data then necessary. Take a look at this article on how much data is advisable for each timeframe.
Where should the analysis start on shorter timeframes?
This actually follows the same principle as an EOD chart. The analysis period needs to start just after the peak before the last major trough in the timeframe above the current chart.
Does the analysis need to be inherited all the way down from the EOD chart?
The short answer to this question is "Yes".
The long answer is that as you move down the timeframes the nominal model is actually less rigid, it becomes (partly) "dynamic". ST does however need to start from a static point in the model, which is at about the 40-day level, depending upon how data you are analysing. As it works down towards the shorter timeframes it takes a more dynamic approach and is able to handle the subtleties of the intraday analysis much better.
It is possible to start the inheritance chain from the 4-hour chart, but ST might not find as good a static starting point, resulting in a lower quality analysis on the shorter timeframes. The benefit of leaving out the daily analysis (a small reduction in requested processing power) is not that great and the possible reduction in analysis accuracy is far greater.
The flow of information is one-way.
This is a subtle albeit important point. Information is passed down from the longer timeframes, influencing the analysis on the progressively shorter charts. Information however is not passed up in the opposite direction. Given that the analysis on the shorter timeframes is based on information received from the longer timeframes, if information was passed back up again that would constitute a "short-circuit" in which the analysis influences itself.
When using a custom nominal model the cycle lengths and harmonic ratios must correspond.
First of all, when using a custom nominal model always make sure that the nominal model is consistent.
As advised in that article it is always best to deal with cycle lengths using the smallest resolution possible. After creating a consistent nominal model and before inheriting the analysis make sure that a custom nominal is applied to the chart below it with exactly the same cycle lengths and harmonic ratios. The best way to do this is to copy and paste the cycle wavelengths while paying close attention to the harmonic ratios.
Why is Sentient Trader unable to inherit the analysis?
A failure to inherit the analysis indicates a discrepancy that Sentient Trader is unable to work around.
While an EOD chart almost invariably benefits from more data, intraday charts inherit their analysis information so they don't benefit from more data then necessary. Take a look at this article on how much data is advisable for each timeframe.
Where should the analysis start on shorter timeframes?
This actually follows the same principle as an EOD chart. The analysis period needs to start just after the peak before the last major trough in the timeframe above the current chart.
Does the analysis need to be inherited all the way down from the EOD chart?
The short answer to this question is "Yes".
The long answer is that as you move down the timeframes the nominal model is actually less rigid, it becomes (partly) "dynamic". ST does however need to start from a static point in the model, which is at about the 40-day level, depending upon how data you are analysing. As it works down towards the shorter timeframes it takes a more dynamic approach and is able to handle the subtleties of the intraday analysis much better.
It is possible to start the inheritance chain from the 4-hour chart, but ST might not find as good a static starting point, resulting in a lower quality analysis on the shorter timeframes. The benefit of leaving out the daily analysis (a small reduction in requested processing power) is not that great and the possible reduction in analysis accuracy is far greater.
The flow of information is one-way.
This is a subtle albeit important point. Information is passed down from the longer timeframes, influencing the analysis on the progressively shorter charts. Information however is not passed up in the opposite direction. Given that the analysis on the shorter timeframes is based on information received from the longer timeframes, if information was passed back up again that would constitute a "short-circuit" in which the analysis influences itself.
When using a custom nominal model the cycle lengths and harmonic ratios must correspond.
First of all, when using a custom nominal model always make sure that the nominal model is consistent.
As advised in that article it is always best to deal with cycle lengths using the smallest resolution possible. After creating a consistent nominal model and before inheriting the analysis make sure that a custom nominal is applied to the chart below it with exactly the same cycle lengths and harmonic ratios. The best way to do this is to copy and paste the cycle wavelengths while paying close attention to the harmonic ratios.
Why is Sentient Trader unable to inherit the analysis?
A failure to inherit the analysis indicates a discrepancy that Sentient Trader is unable to work around.
- By far the most common cause of this issue is an inconsistent custom nominal model. Reading this article is highly recommended.
- Similar to above, another common cause of this issue are discrepancies between the custom nominal models of charts of different timeframes.
- If a custom nominal model isn't to blame then the cause is discrepancies in the data. Try a different provider either for the shorter, the longer or both timeframes.
Sam Medwin
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