What Is a Tick Chart

What Is a Tick Chart in Day Trading?

7 min read

What is a tick chart in trading? These types of charts are popular amongst future traders. But when it comes to chart styles, is there one that’s better? Trading is an activity of buying and selling both goods and services. Trading is not easy, and most people use ‘trading assists’ to help them make the right trading decisions and for trading wisely. If you are looking for a trading assist that can help, a tick chart is the one to go for.

Tick charts are a form of a bar chart that is used to simplify trading. When used in trading, a tick chart creates a new bar each time a specific/given amount of transaction is executed. A tick chart differs from a time-based chart, which creates a new bar based on a fixed time interval. They are usually used for trading futures.

Many refer to a ‘tick chart’ as a day trading chart that can measure transactions effectively. Those who use tick charts say that they are useful for many reasons.

Tick charts are simple and useful for gauging a trading pattern’s highest momentum and strength. This helps individuals make the most out of their trading by identifying the right trading patterns for profit maximization and basing their judgments and moves on it.

By striking the right cord, based on these patterns, a day trader can benefit by maximum measure. Tick charts are also useful because they help in measuring transactions peculiarly.

Tick charts measure the number of transactions per bar. You can select different size charts; however, the Fibonacci time frame chart is the most popular.

Tick charts are used by those dealing in Forex markets; they are used for futures contracts (esp. The euro vs. Dollar) and other purposes.

Tick Chart Example

2000 Tick Chart
A 2000 tick chart is used for shorter scalps, intraday.

Benefits of Using Tick Charts

After understanding what a tick chart is, the next step is to understand the benefits of it. Tick charts are very popular and have many benefits to offer. These include the following:

  1. Noise reduction
  2. Smart money coming in
  3. Simplify your trading
  4. Trend changes
  5. Works great with Wofle Waves

Noise Reduction

Tick charts reduce the noise present in a time-based chart. When the market is slow during pre-market time or lunchtime, tick bars assess and present an acute picture of where you should be trading to make the right start.

When the market is active, tick charts clear the clutter and show where you should trade above or below it, according to the pre-market value, to ensure maximum results.

Tick charts help assess both micro-trends and macro-trends to clear the noise and help you make the right decisions based on the true market volatility and movement.

Let’s look at the other benefits of using a tick chart. Check out our trade rooms if you’d like to see a tick chart in action.

What Does a Tick Chart Tell You?

What does a tick chart tell you? It measures the minimum up or down movement in price. Another thing it’ll tell you is the change in price from one trade to another. It’s used a lot in Futures trading.

Many traders wait for smart money to come into the market to make smart moves and capitalize on their gains.

When you combine the volume of a movement with a tick chart, every tick bar becomes equal. This will help you assess the price movements and see those with higher volumes and those without. Then, you can assess and make your moves accordingly.

Tick charts help you identify smart and retail money to help you decide which one to go for.

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How to Read a Tick Chart

After establishing ‘what a tick chart is in trading,’ the next step is understanding how to read it.

A tick chart has four signals: ‘open,’ ‘close,’ ‘high,’ and ‘low.’

While ‘open’ is an indication of when the trade opened, close on the other hand, is an indication of when the trade closed.

Moreover,’ high’ is the highest value of a given trade, and ‘low’ is the lowest value. Try out a tick chart with divergence trading, another trading strategy.

Simplify Trading

Pre-market trading and after-hours trading are always difficult. Tick charts help identify and make sense of what goes ‘outside’ a market session.

During pre-market and after-hours, the volume traded is thin and specific; however, combined. With tick bars, this momentum can get a pattern and significance so that you can trade and make specific gains.

This can be helpful for your intraday chart setup.

Bearish Tick Chart Example

Bearish Tick Chart

Bearish Tick Chart Price Action Example

Assess When Trends Go Out of Fashion

Another benefit of using a tick chart is to see when trends wear out. To answer what a tick chart is in trading, this is another measure that can help you understand.

All markets go through a period of range expansion and contraction. Markets contract as much as they expand. A tick chart can help identify a useful and insignificant trend to clear out clutter and make trading moves wisely.

Tick charts help in simplifying trading. They make use of slow-range bound markets. Furthermore, they help traders identify specific market trends to capitalize on them.

Tick charts are, therefore, helpful and useful and go a long way in helping traders in every capacity, especially with support and resistance levels.

Final Thoughts What Is a Tick Chart?

Tick charts are known to represent the same data differently. They are concise, they are assistive, and they are short. They help trade effectively and allow you to make the right trading moves.

After sorting out data for you precisely and concisely, a tick-chart can help you make instant decisions based on acute data. Without market noise and distortion, you can make the right decisions and make the most out of your trades.

Tick charts are known to help you make the right entries. They help you assess data based on the right time, which most trading is all about, and allow you to move ahead by picking and choosing your trades wisely.

Frequently Asked Questions

Scalping is better with a 50-tick chart or less. The 1000 and 2000 tick charts are the most popular for day trading.

Tick charts are found within any major online broker's platforms. Popular tick charts are the 1000 and 2000 ticks. Most platforms are customizable to change timeframes.

A 500 tick chart makes a new bar after 500 trades were made. It's the set number of trades within a bar.

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