In technical analysis of financial markets, limiting the historical data used in calculations is often necessary. This restriction to a specific lookback period, commonly referred to as “bars back,” prevents indicators from being skewed by outdated market conditions. For example, a moving average calculated over 200 days behaves differently than one calculated over 20 days. Setting a maximum limit determines the furthest point in the past used for computation. A “maximum bars back” setting of 50, applied to a 200-day moving average, would effectively use only the most recent 50 days of data, even though the indicator is configured for a 200-day period.
Constraining the data used offers several advantages. It allows analysts to focus on recent market activity, which is often more relevant to current price movements. This is particularly useful in volatile markets where older data may not reflect current trends. Furthermore, limiting the computational scope can improve the responsiveness of indicators and potentially reduce processing time. Historically, this has been crucial in situations with limited computing resources.
