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Understanding Tick Charts - YouTube
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hi traders it's Bruce banks here and
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we're going to go into exactly what tick
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charts are and how you can use them in
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your trading now we first have to define
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what a tick chart is a tick chart is a
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predefined number of trades between a
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buyer and a seller now this definition
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is extremely important because on a tick
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chart right now you'll see on the left
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hand side I have a 2 33 tick chart
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that's saying there are 233 trades
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between buyers and sellers now that
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means that it could be a single contract
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traded 233 times between two different
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traders or it could be thousands of
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contracts traded between two different
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traders it all is in the definition of
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tick charts and the fact that a single
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tick in the tick charts is considered
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the same if it's one contract traded or
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if it's 10 contracts or 200 contracts as
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long as that's done within a single
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transaction this is a very common
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confusion with tech charts and the fact
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that is actually the true number of
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contracts traded whereas it's actually
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the number of transactions done between
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traders of varying contract size now
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right on the left here I have 2 33 tick
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charts right now that's a Fibonacci
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number and it's valid because traders
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use it people believe in food nochi
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numbers for varying reasons but if
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people are watching that time frame then
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it validates itself as a time frame if
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233 tick charts move too fast in your
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markets, say crude or the Nasdaq which we
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have up right now you can often double
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that number to 466 and it will reduce a
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lot of the noise in each bar another
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common number that's used is 512 you
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really have to put the tick charts on
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the market EU trade and find one that's
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not too low of a number and not too high
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depending on the frame that you trade
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within now for tick charts instead of
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I'm as a definition they have the volume
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which is the volume of whatever you've
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chosen saying here or going to refer to
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it as 233 ticks from right now on in the
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rest of this video where as you'll see
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on the right hand side I have the same
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day up but I have volume on the bottom
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because on the right hand side it's a
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five minute chart so each of these bars
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represents five minutes in time during
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the trading hours and off hours now
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what's the benefit of using tick charts
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over say a normal bar style where you're
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defining your bar by time well a tick
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chart will allow you to go a little bit
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deeper into the charts and have that
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volume displayed more on your charts
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then instead of a normal time based
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chart let's take a look at our first
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example here you can see on the right
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hand side on the time-based chart that
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the market starts going down here now we
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see each of these bars is you know
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representing five minutes and not much
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more than that we see the market in a
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steady decline whereas if we look at the
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same time period over on the tick charts
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which starts right here you can see that
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every bar in the tick charts may not
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represent five minutes because it was
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happening faster than five minutes it
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was reaching those predefined 233
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transactions far faster than the five
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minute time frame now you can see an
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even greater example of this over where
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the market spiked up and then down
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bringing over to this 15 minute bar here
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on the right hand side which spanned a
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large range of the trading and if we
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look at it on the tick charts it's
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really broken down by how many bars were
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formed during that same five-minute
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period this allows us to get a bit
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better of an idea of what's trending
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especially in the market moving quite
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quickly this doesn't say that you can't
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use higher
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values for your tick charts we're just
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talking about the short-term time
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trading because i find this is one of
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the most common times where traders use
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tick charts and ask questions about
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what's another benefit of tick charts is
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the fact that if you look over on the
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bar charts are time-based charts on the
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right hand side you'll see a lot of
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flatness in the market there are
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multiple bars in a row that really
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haven't moved any significant distance
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they're just flat on flat on flat
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whereas if you look at those exact same
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time period on the tick bass charts
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you'll still see good trending in the
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market it's not that the market any
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different it's not that the data is any
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different it's just the way the data is
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delivered to you and presented to you so
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on the tech based charts we see a
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clearly up training market here with no
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real flat areas whereas if we look over
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on the time-based chart there's a lot
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more bars that are absolutely or
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flattened out and not displaying that
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exact same clearly trend upward trending
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market this is one of the clear benefits
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of tech charts it reduces a lot of the
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noise from the standard time-based
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charts by if the market just isn't
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trading and especially during off-hours
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it reduces that kind of wasted space of
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expanded you know flat bars over to a
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more concentrated format now this isn't
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say that on tick charts the market can't
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go sideways it absolutely can because
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the market does sometimes you go
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sideways what it does though is during
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the sideways times you'll see a lot of
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actually take a look at it right over
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here so in this area from this point in
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the market to right before it starts to
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trend down there's a lot of flatness I
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guess you could say in the market this
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is an off hours trading period and
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whereas that's going to expand period on
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the time-based charts whereas the tick
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charts consolidate that too just a few
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bars right here it removes that
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ways of seeing that large kind of blank
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area on your charts that you don't have
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to ignore because when the market
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flattens out and consolidates even
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during off hours trading it's still
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important to pay attention to I should
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also mention that i have candlesticks up
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here right now you can use this with a
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range of different charting styles bar
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charts are very common with this I just
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prefer candlesticks because I like to
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see the tales of the candlesticks and I
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find that represents a data quite
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clearly for most of my chartings types
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the important thing is for you to open
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up tick charts on your own platform and
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on the market to you trade and see if
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you can pull any possible extra data
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from them you can even try say replacing
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if you have a standard daily hourly
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chart up and then instead of like a five
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min our 50 minute put in a 2 33 tick put
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in a 466 take or maybe even a 512 tick
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chart and take a look and see if that
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gives you a little bit more information
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exactly what's happening on those lower
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time frames but I shouldn't say lower
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time frames because it's not time frame
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based on those more transaction-based
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time frames on the lower scale now a
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quick summary what we've gone over tick
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charts are a really great way to see
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what's happening on an individual tick
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by tech transaction by Tracking's action
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basis they do hide a little bit of the
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information because you don't know how
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many contracts are the true volume of
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transactions for every bar but as a
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general rule it evens out and it's quite
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a good way to see especially on the
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shorter time frames but shorter chart
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periods exactly what's happening in the
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market especially for if the markets
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making violent moves up or down you can
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apply tech charts to a wide range of
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markets and it will show you things that
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standard time-based charts may not as
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you know we can look over at a
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time-based art and see that a 5-minute
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far there was a massive move in the
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market but we don't have much more
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information other than was
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high volume high ranging bar but whereas
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we look at the tick based data of this
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exact same bar and we can break down
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exactly when it's stalled in those in
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that bar even breaking down a
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five-minute bar to a lower timeframe but
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at the same time it doesn't overload us
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with data where the market is just
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laying flat or there's not a lot of
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transactions being made I'm going to go
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more into time-based charts in another
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video and I hope to see you there this
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is Bruce banks enjoy trading
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you
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