Tick Charts or Time Based Charts

4
Sep

Tick Charts

Tick charts are beneficial because they allow traders to gather information about market activity. Since tick charts are based on a certain number of transactions per bar, we can see when the market is most active, and, likewise, we can see when the market is sluggish and barely moving. In a 144-tick chart, for example, one bar will print after every 144 transactions (trades that occur). These transactions include small orders as well as large, block orders. Each transaction is counted just once, regardless of the size. In periods of high market activity, more bars will print. Conversely, during periods of low market activity, fewer bars will print. Tick charts provide an easy means of determining market volatility.

Advantages of Tick Charts

The advantages of Tick charts is that you get Clearer analysis when the market is active the time based charts may not be quick enough. 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.

It is not time based so the tick chart will only one or two candles during calm periods and avoids therefore an accumulation of small candles. 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 you’re trading decisions.

You will get also get confirmation of trendline breakouts, clearer signals on when to exit the market and correlation between the volume and the price development.

Time Based Day Trading Charts

Time based day trading charts are mostly used in conjunction with other charts but there are some day traders that use time based charts exclusively. For shorter time frame trading such as intraday trading the 5 minute, 10 minute, and 15 minute charts are very popular. For swing traders or longer term traders a daily or weekly chart may be used.

Advantages of Time Based Trading Charts

One of the biggest advantages of time based trading is when there is high volatility and movement you won't see as many indecisions and snapping back and forth with the minute charts. This is helpful because when the market really starts to move it can be difficult to see entries and exits.

 

 

 

 

 

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