OHLC vs OLHC - sangramnayak1/derivative_market_backtest GitHub Wiki

1. OHLC vs OLHC

  • OHLC β†’ the normal candle order:
    Open β†’ High β†’ Low β†’ Close
    That’s how most candle data is given.

  • OLHC β†’ this is a sequence ordering if you watch intraday price ticks:
    Open β†’ Low β†’ High β†’ Close
    (i.e., price first dips after open, then rises, then closes somewhere).

So the difference is about the intraday path of price:

  • OHLC intraday β†’ price opened, rallied up (high), fell (low), then closed.

  • OLHC intraday β†’ price opened, dipped first (low), then rose (high), then closed.

Both candles might have the same O/H/L/C values at the end, but the intraday journey is different.

2. Why does it matter?

  • If the market forms OHLC type (open β†’ high first, then low), it means sellers came in after the open.
    πŸ”Ž Suggests β€œSell on Rise” type behavior intraday.

  • If the market forms OLHC type (open β†’ low first, then high), it means buyers supported dips right after open.
    πŸ”Ž Suggests β€œBuy on Dip” type behavior intraday.

This is exactly what you said:

"price keeps fluctuating until a trend is made".
Yes βœ… intraday it oscillates, but the path (OHLC vs OLHC) gives you a sentiment bias: who is controlling dips or rises.

3. Option trading implication

  • OHLC intraday (Sell on Rise bias) β†’

    • Calls tend to lose value (CE writers dominate).

    • Better to look for Put buying opportunities if other confirmations (PCR, volume, VWAP) align.

  • OLHC intraday (Buy on Dip bias) β†’

    • Puts lose value (PE writers dominate).

    • Better to look for Call buying opportunities if other filters confirm.

⚠️ But β€” this is only a bias, not a standalone system. You need confirmation with:

  • PCR (e.g. contrarian signals: >1.5 β†’ bullish bias for calls, <0.6 β†’ bearish bias for puts)

  • VWAP (price above β†’ bullish, below β†’ bearish)

  • Volume surge confirmation

4. Quick rule-of-thumb table

Intraday Path Meaning Bias Option to Prefer (with confirmation)
OHLC (rise first, fall later) Sell on Rise Bearish Buy PUT
OLHC (dip first, rise later) Buy on Dip Bullish Buy CALL

βœ… Note:

  • OHLC suggests sell on rise β†’ PUT bias
    • If the price went Open β†’ High β†’ Low β†’ Close (i.e. high was made before low) β†’ OHLC β†’ Sell on Rise β†’ Put bias.
  • OLHC suggests buy on dip β†’ CALL bias
    • If the price went Open β†’ Low β†’ High β†’ Close (i.e. low was made before high) β†’ OLHC β†’ Buy on Dip β†’ Call bias.
  • But always check trend/VWAP/PCR before acting.