Tick Charts: What Are They & Why You Should Use Them

 

Trading Setups on the Tick Chart When you combine the tick chart with the Heikin Ashi candle stick study you get a nice clear picture of the current market condition. Trending markets are easy to identify with clean bars .

This website needs JavaScript. Switching to tick and tick has completely masked the volatility differences and allows me to trade more consistently regardless of the volatility.

1. Tick Charts allow you to follow the Professionals

Trading with X tick charts: the hidden secret of successful traders The image above shows a 2 hour chart and a tick chart, which display roughly the same amount of candles. If we draw the main resistance trendline on both charts, we see that there is a significant break of the trendline on May 5th on the 2 hour chart. Imagine you.

This makes the detection of trends much easier, since a zero-trend environment in the time-based view can change your support and resistance lines drastically and consequently your trading decisions. The 1 hour chart makes it impossible to identify where the trend will go or if it might change. The only thing we know, is that it was the right decision to sell. In the classic time-based view, the volume shows only the number of securities exchanged during a given period.

However, in the x ticks view, each volume bar represents the number of securities exchanged per candlestick. Since the number of transactions per candlestick is constant, each volume bar reflects the average volume of all transactions of the corresponding candlestick.

Let's see what that means in an example:. Trading may expose you to risk of loss greater than your deposits and is only suitable for experienced clients who have sufficient financial means to bear such risk.

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Home Why choose ProRealTime? Trading with X tick charts: In the example below, we are using a ticks view. Consequently, each candlestick shows the price variation of consecutive ticks.

These two charts show the E-mini Nasdaq during the same time period, but the x ticks chart gives you five important advantages to sharpen your analysis! Clearer analysis Not time-based Confirmation of trendline breakouts Clearer signs when to exit the market Correlation between the volume and the price development. Let's zoom on the time period of April 23rd to April 27th and take a closer look at the candles.

If the market is active, the classical view might sometimes not be "fast" enough. Sharp drops and increases of the price will be displayed as one large candle, even if you choose a rather small view like 1 minute. You find an example for this case in the image above. You can see that in the 2 hour chart several small candles common during the night and several long candles common during the day are displayed. A trendline can be drawn between the 23th and the 25th, but will not indicate the trend change that takes place on the 25th and the 27th.

You would actually need to draw two lines, which makes it even more difficult to decide where the trend might go. In the x ticks view, the long candles are divided into smaller tick bars. A strong resistance line can be drawn from the 23rd until the 27th, which allows you to better understand the trend during these days. We will keep looking at the same time period, but discuss another aspect of the candles in x ticks view.

In times with only little buying and selling activity, like before the close of the market or around noon, the classic 2 hour view will show several unimportant candles that will give you no major information as you can see in the bottom chart of the example above.

That is not the case in the x ticks view, which shows more candles during days of high activity and less during days when the market is calm. For instance, on the 27th the x ticks view displays 32 candles while the day before it only displayed 16 candles. As mentioned before, support and resistance lines can be very different in the two views. But what does that mean exactly? Let's imagine that we were trying to enter the market on May 4th if a bullish signal was confirmed.

The image above shows a 2 hour chart and a tick chart, which display roughly the same amount of candles. If we draw the main resistance trendline on both charts, we see that there is a significant break of the trendline on May 5th on the 2 hour chart.

Many market participants might go long, assuming that this is the start of a new bullish trend. 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. As for the of trades per bar, everyone got their own numbers here and you just have to see what makes the charts pretty and tradeable for your eye plus grants entry signals with moves big enough to outrun the costs of trading. Only trade pretty charts is my favorite quote. If you want to know more about tick charts and how I trade them on the Futures market, check out my Youtube playlist:.

I have read and agree to the privacy policy. Well, because of this: So, my two reasons for trading tick charts are: MUCH better read on market cycles, be it trends or consolidations — the waves and price patterns are much, much easier to read as during times of high trading activity, we get more bars, thus more entry opportunities, and during times of low trading activity, we get fewer to zero entries, which is exactly what we want.

MUCH quicker entry into breakouts. Time-based charts require us to wait for the close of a bar which could be much too late when trading breakouts. Tick charts more often than not will grant us a much earlier entry into a real breakout as the bars will print quicker when trading activity rises, pushing price to break out in the first place.

If you want to know more about tick charts and how I trade them on the Futures market, check out my Youtube playlist: No Comments Post a Reply Cancel reply.

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