Tick Price Charts
What is a Tick Chart?
A Tick chart is a type of chart that is based on trading volumes and a pre-specified amount of transaction (incoming ticks) and not in time. Actually, using a tick chart traders may completely eliminate the time factor and focus entirely on the real Price Action via the executed transactions. For example, a chart which forms a bar every 34 transactions is called a 34-tick chart.
Tick Chart Features
These are some of the main features of the Tick Charts:
(1) Tick-Charts can correlate price action and market volume
(2) Tick charts can completely eliminate the factor of time
(3) Tick charts are more volume based than they are price based
(4) Tick Charts are forming a few candles during non-active hours and many candles during high-activity hours
(5) Traders can easy identify strong trends or upcoming reversals
(6) Traders can read a Tick Chart like a candlestick chart
(7) Tick Charts are ideal for scalping volatile markets
Tick Chart Settings
There is no perfect recipe to set a Tick Chart, it depends on the asset you are trading, on the market conditions, and most importantly on your trading style (day-trader, scalper, etc). Here are some important points:
■ Scalpers Forex Traders may use the 5-tick or the 21-tick or the 70-tick chart. Some traders believe that the best tick number for EURUSD is 70 ticks
■ Stocks traders input the number of ticks based on the Fibonacci sequence:
Usually, stocks traders use 89 or 144 or 233 ticks, mainly 233 ticks.
The advantage of Tick Charts in Volatile Markets
During high-volatile market conditions, traditional charts are forming long bars that have little information to show. In contrast, a tick chart during volatile market conditions divides the price action into smaller candles and therefore make it easy to identify strong trends and reversals.
◙ Tick Price Charts