You’ve just got Custom Tick Chart Indicator for MT4 and you don’t know how to use it? You are in the right place! In this tick chart trading guide, we explore tick chart benefits, drawbacks, and specifics.
AtoZForex – Which chart do you use for Forex day trading? Usually, Forex traders make use of time, tick, price range or volume charts. Today, we will focus our attention on tick charts. Tick charts can provide your chart analysis with some valuable information.
Tick chart trading guide
Tick-based day trading charts are representations of the price range during a certain number of transactions on the market.
For instance, time-based charts usually draw a new bar after a particular period of time. With tick charts it is a little bit different – they display a certain number of trades (ticks) before drawing a new bar.
What are the benefits of Forex tick charts?
Alright, now you understand what a tick chart is. Now let’s look into Tick chart benefits for traders
Forex tick chart Benefit #1: Valuable information
If you use tick charts in combination with the intraday time-based view, you could have some additional information for your analysis. For example, you could get an access to the correlation between market volume and price movement.
Forex tick chart Benefit #2: Can help to spot increased volatility
Tick charts operate on transactions – this implies that you will only see a new bar when there have been enough trades. That is why tick charts adjust to the market. In times of high activity, tick charts draw more bars. This could help you notice the moment of increased volatility
Forex tick chart Benefit #3: Better identify real support and resistance levels
In the same way, when the market is not very active, tick charts will only draw a few bars. This is in comparison to the time-based charts, which would draw a bunch of smaller and less important candles. Just like that, tick charts make it easier to spot trends and focus on real support and resistance levels.
During high volatility period, time-based charts will display a long candle. In opposition to this, tick chart will show a candle that is divided into some smaller candles. This could provide further information about momentum and future direction of the move. Tick charts can also help to identify possible reversal.
Therefore, tick charts can be very helpful for scalping traders.
In addition, tick charts tend to display more symmetrical patterns.
Tick chart trading guide: Drawbacks
Only some of the Forex brokers’ charting packages will offer tick charts. Moreover, while looking at tick charts from different data feeds, you can notice that they tend to be different.
As we know, tick charts are based on a number of completed transactions. This number can change due to some factors like different data feeds and missing data fragments due to the network disruptions. Other reasons include aggregated transactions from feed provider to reduce bandwidth and start of calculation at different ticks.
Thus, this type of charts can be somewhat confusing for Forex Beginners.
Which tick chart time frame is better?
Normally, time frames of tick charts are limitless. While some prefer tick charts with 33, 133 or 233 ticks, other traders like to choose from Fibonacci numbers like 13,21,34, and the like.
You can select the tick number by comparing it to the time-based chart. For instance, if you trade with 5-minute charts, you may opt for a similar looking chart in the period of normal activity. Like this, you will be able to see when the market volume changes during high or low activity periods and adjust your trade accordingly.
Tick chart trading guide specifics
Forex day trading with tick charts is no different from trading with any other chart. You can choose from a variety of strategies that use tick charts. Some of the most popular tick chart trading strategies include 2000-tick chart for day trading and 70-tick charts for price action scalping.
One of the key requirements before starting the real trading – educate yourself about Using Scalping Forex Strategies – they might not be suitable for everyone.
Think we missed something? Let us know in the comments section below.