5 Compelling Reasons to Use Tick Charts


The solution is to re-build your cache — I do this every 2 to 3 weeks or as soon as I notice my tick charts are slow to load. Are they better than minute charts? Interestingly enough, as I observed, during certain times of the day every tick bar will close at around the same volume, but that is another story. On the tick charts, you will almost never see huge bars like that, as higher volatility means more bars, means more entry opportunities.

What is a Tick Chart?


This video will demonstrate 3 advantages that tick charts have over time charts in a day trading strategy … and also 3 disadvantages! You can use tick trading strategies for the ES, Forex, stocks and futures, on thinkorswim, MT4, Oanda or any other charting platform that allows you to employ day trading tick charts.

Are tick charts better for day trading than time charts? There are advantages and disadvantages to each. I tend to prefer them. What are tick charts?

In this context a tick is a trade, regardless of volume. Just how many trades go through the market, as opposed to this chart here where we have a 2 minute chart that means that each bar lasts for 2 minutes. On tick charts, each bar lasts a certain number of trades. So you cannot say there is an equivalent of any tick chart to any minute chart because they are just completely calculated on different methods.

One of the advantages of tick chart vs candlestick time charts is that you generally get a more narrow range at swing highs and swing lows, and the benefit of that is that you typically have a smaller risk on your trades. Let me demonstrate this to you to show you exactly what I mean. Another advantage is that when you get a lot of volume coming in, it creates a less choppy chart pattern than time charts. You tend to get these more sine waves type of wave patterns.

The more orderly pattern that I find easier to trade those patterns. This is the exact same chart but on a 2 minute bar. So you see it comes up, first of all we get a nice big volume spike there and then we get moving up, moving down. See much more clear volume patterns. Very low volume, see we never saw any situation where we had very low volume on the tick bars, but here we do. And that is, you know very helpful in certain situations.

For example, I use ticks charts for timing my entries; that means whenever trades came into the exchange, in whatever range price moved during that period, will then be shown as a candlestick bar.

Time does not play a role here. In times of high trading activity, a new bar will be printed roughly every minute on the ticks charts on the E-Mini Dow Jones, for example, and in off-times, it can take several hours for a new bar to be printed. Mind you, tick charts are not to be confused with volume bars! Volume does not play a role for the creation of tick charts, as a trade is simply a trade, whether it comes with the size of 1 contract, or contracts.

Interestingly enough, as I observed, during certain times of the day every tick bar will close at around the same volume, but that is another story. So other than different criteria for when a bar opens and closes, the charts look the same as time-based charts. Now, the both in comparison. On the left, a ticks chart, and on the right, a 5 minutes timeframe chart. The two pink bars mark the same area on each chart.

As you can see, while the tick chart printed a lot of bars during the volatile up-and down moves with plenty of entry opportunities, the 5m timeframe would have left you standing in the rain very likely, as V-tops and bottoms are almost untradeable on this very popular timeframe for daytraders.

But how would it look on the M1 charts? Now these charts look much more familiar, and the M1 becomes much more tradeable during these high volatility moves. So why not just trade an M1 chart? Well, because of this:. As you can see, the tick chart printed only 9 bars in roughly 7 hours during times of low volatility, delivering us an incredibly clean chart, while the M1 chart printed a lot of horrible stuff that would have lead us to trades where there are no trades.

This can, of course, be partly solved by not trading during off-hours. However, this problem also exists during trading sessions with little trading activity, and these do happen again and again and again and are what actually cost traders a lot of money. Everyone can make money in a trending market, but how about when prices start to range, produce fakeout after fakeout, and behave not as we want them to?

This is when tick charts are king, as they put much less emphasis on consolidations and times of low trading activity.

They are, simply put, much easier to read and to trade. When things become hectic and we need to get in and out quick, tick charts resemble a M1 or even 30 seconds charts, and when things slow down and we have to back off, they resemble a M5, M15, M30 or even H1 chart much more, printing much fewer signals.

They are doing a lot of the work for us, dynamically switching between timeframes, and not letting us trade shitty charts when we are not supposed to trade them. Another thing that will almost never happen to you with tick charts is that you are left out, standing in the rain.

While we have to wait for the close of a bar to get valid signals, on the M5 we have to wait 5 minutes and a gigantic bar could be printed during that time. On the tick charts, you will almost never see huge bars like that, as higher volatility means more bars, means more entry opportunities.

Also, if you want to use volumes, you can use a volume histogram, and if higher volumes are printed on average during the creation of tick bars, it means the professionals are trading, lower volumes mean the amateurs are trading, and thus you can follow the professionals much easier combining tick charts and volume histograms. These two facts will make trading much, much easier for you, trust me. This information can be applied to any market that grants users access to volume information, i.

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