About Tick Charts
Charts used for day trading can be based on several different criteria, some of them being time, ticks, price range or volume. Tick based charts represent price change during given number of transactions on the market. E.g. while time-based charts draw a new bar after a set period of time, tick charts display a certain number of trades (ticks) before printing a new bar.
A chart drawing a bar after every 30 transaction is often referred to as a 30-tick chart.
Using tick charts exclusively or in combination with the classic intraday time-based view could enrich your chart analysis and provide you with some additional information.
One of these additional information is the correlation between market volume and price development. As tick charts are transaction based and make new bars only when there have been enough trades, they adjust to the market and draw more bars in case of high activity. This helps to notice momentum and increasing volatility. The same way during low activity periods (like noon or after-hours) tick charts only display a few bars as opposed to time based charts where you'll usually see a row of smaller less important candles. Without this accumulation of small candles tick charts make it easier to spot trends and properly identify real support and resistance levels.
70-tick chart: notice the difference in the number of tick bars drawn before and after 9:00 (on the above chart London open is at 10:00, broker time offset is GMT+3)
233-tick chart showing Asian session and London session (London open at 10:00)
133-tick chart: notice how market activity decreases around US session-end (23:00) and starts to increase before London open (10:00)
While during high volatility periods time based charts may show only a long candle, tick charts show that candle divided into some smaller candles and may provide more information about momentum and direction, or a possible reversal. This might be especially helpful for traders scalping.
30-tick chart with some long candles on the main chart which are divided up into smaller candles on the tick chart
30-tick chart with another example
Patterns also tend to be more symmetrical on tick charts.
Unfortunately only some brokers/charting packages provide tick charts. As an addition looking at tick charts from different data feeds you will notice that none of them are the same. The reason is that tick charts are based on the number of completed transactions, however this number can change because of factors like:
70-tick chart at broker Alpari UK using RW Tick Chart indicator
70-tick chart at broker Pepperstone using RW Tick Chart indicator
70-tick chart at broker FXCM using RW Tick Chart indicator
70-tick chart at broker Dukascopy Europe using JForex platform (not MT4) provided by the broker
- different data feeds
- aggregated transactions from feed provider to reduce bandwidth
- missing data packets during momentary network disconnections
- even starting calculation at different ticks could result in some changes
What tick chart time frame to choose
The time frames to choose from are limitless. Some prefer charts with 33, 133 or 233 ticks, others choose from Fibonacci numbers like 13, 21, 34, 55, 89, 144, 233, etc.
Another approach is selecting the tick number by comparing it to a time-based chart. E.g. if someone trades 5 minute charts, he may choose a tick chart looking similar to that chart in an average market activity period. Then he would be able to see when the market volume changes during high or slow activity periods and trade accordingly.
There is no best time timeframe to recommend. There are different people with different strategies and after some experimentation and evaluation everyone will be able to pick a tick chart time frame that suits them best.
How to trade using tick charts
Just as with any other chart types there are many trading strategies using tick charts. One could prefer 2000-tick charts for day trading while another would use 70-tick charts for price action scalping. You need to look around on the internet, experiment and find (or develop your own) one that suits you the best.
If you are interested in trading Forex and scalping, you might also want to check out the book Forex Price Action Scalping by Bob Volman
Bob is an independent, professional trader who uses 70-tick charts to trade the EURUSD currency pair at Forex and in his book he leads you into the world of professional scalping based on price action.
A 70-tick chart used by Bob Volman (professional trader and author of book 'Forex Price Action Scalping')
Another 70-tick chart example from book 'Forex Price Action Scalping' by Bob Volman
A similar 70-tick chart using RW Tick Chart indicator in MT4 (with 'RoundToPip' setting enabled)
30-tick chart with RW Tick Chart indicator ('RoundToPip' enabled)
If you would like to learn more about tick charts, check out the Links