What Is A Tick Chart In Trading

  • October 14, 2020

What Is A Tick Chart In Trading? When it comes to chart styles, is there one that's better than the other? Trading is an activity of buying and selling, both goods and services.

Trading is not easy and most people use 'trading assists' in order 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.

What Is A Tick Chart In Trading?

  • Tick charts are a form of a bar chart which 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 is different than a time-based chart, which creates a new bar, based on a fixed time interval. They are usually used for trading futures.

Many people 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 not only simple to use but they are useful for gauging the highest momentum and strength in a trading pattern. This helps individuals to make the most out of their trading by identifying the right trading patterns and for profit maximization and for basing their judgments and moves on it as well.

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 amount of transaction per bar. You can select different size charts; however, the most popular one is the Fibonacci time frame chart.

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

What Is A Tick Chart

An 8000 Tick chart used by our Futures Trade Room moderator. This type of price analysis is provided weekly.

1. How to Read a Tick Chart

After establishing 'what is a tick chart in trading', the next step is to understand how to read it.

A tick chart has four different signals including ‘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 of a trade. You can try out a tick chart with divergence trading; another trading strategy.

2. 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

3. Tick Charts Help in Noise Reduction

Tick charts reduce the noise present in a time based chart. When the market is slow during pre-market time or lunch time, 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 form a picture of where you should be trading to trade above or below it, according to the pre-market value to ensure maximum results. 

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

Let's continue to at look at the other benefits in using a tick chart. In fact, if you'd like to see a tick chart in action, check out our trade rooms.

What Is a Tick in Trading?

  • 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. 

1. They Help in Seeing When the ‘Smart Money’ Is Coming in

A lot of traders wait for smart money to come in the market so that they can make smart moves and capitalize the most 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 that have higher volumes and those that do not. Then, you can assess and make your moves accordingly.

Tick charts help you in identifying smart money and retail money in order to help you decide which one to go for.

Tick Chart 2000 Ticks

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

2. They Help in Simplifying Your Trading

Pre-market trading and after hours trading is always difficult. Tick charts help in identifying and making sense of what is going ‘outside’ a market session.

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

This can be really helpful for you intraday chart setup.

Bearish Tick Chart Price Action Example

Bearish Tick Chart Price Action Example

3. Assess When Trends Go Out of Fashion

Another benefit of using a tick chart is to see when trends wear out. To answer what is a tick chart 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 in identifying a useful trend as well as an insignificant trend to clear out clutter and to make trading moves wisely.

Tick charts help in simplifying trading. They make use of slow-range bound markets. Furthermore, they help in allowing a trader to make specific market trends to capitalize the most on such trends.

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

What Is A Tick Chart In Trading Conclusion

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

After sorting out data for you, in a precise and concise way, 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 mostly trading is all about and allow you to move ahead by picking and choosing your trades wisely.

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