Tick chart vs candlestick time chart in day trading: Are they better than minute charts? What is the best tick chart for ES? Can you do tick chart forex trading?
This video will demonstrate 3 advantages that tick charts have over time charts in a day trading strategy … and also 3 disadvantages!
You can use tick trading strategies for the ES, Forex, stocks and futures, on thinkorswim, MT4, Oanda or any other charting platform that allows you to employ day trading tick charts.
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VIDEO TRANSCRIPTION
Welcome to this video on tick chart vs candlestick time charts for your day trading. Are tick charts better for day trading than time charts?
There are advantages and disadvantages to each. Let’s begin with the advantages of tick charts. I tend to prefer them. So I’ll show you why but also be very, an advocate for the other side of the equation as well and some of the advantages of time based bars such as minute bars.
TICK CHARTS EXPLAINED
Let’s talk about the difference of tick chart vs candlestick time charts. What are tick charts? Tick charts are bars where the number that you put in; let’s say you create a 1000 tick chart, then each bar represents 1000 trades. In this context a tick is a trade, regardless of volume. Just how many trades go through the market, as opposed to this chart here where we have a 2 minute chart that means that each bar lasts for 2 minutes. So it’s based on time, i.e. that each bar will last a certain amount of time.
On tick charts, each bar lasts a certain number of trades. So you cannot say there is an equivalent of any tick chart to any minute chart because they are just completely calculated on different methods.
TICK CHART VS CANDLESTICK TIME CHARTS
One of the advantages of tick chart vs candlestick time charts is that you generally get a more narrow range at swing highs and swing lows, and the benefit of that is that you typically have a smaller risk on your trades. You are risking less money and that’s a huge advantage and that’s one of the primary reasons that I use them. Let me demonstrate this to you to show you exactly what I mean.
Another advantage is that when you get a lot of volume coming in, it creates a less choppy chart pattern than time charts. You tend to get these more sine waves type of wave patterns. You don’t get as many steep angles because that is offset by the market creating, or the chart creating more bars that go horizontally across. The more orderly pattern that I find easier to trade those patterns.
THE DISADVANTAGES OF TICK TRADING STRATEGIES
Now let’s switch over to the disadvantages of tick charts vs candlestick time charts.
This is the exact same chart but on a 2 minute bar. So you see it comes up, first of all we get a nice big volume spike there and then we get moving up, moving down. See much more clear volume patterns. Very low volume, see we never saw any situation where we had very low volume on the tick bars, but here we do. And that is, you know very helpful in certain situations. That’s important to you, and yeah we have got it right there. Very low volume. And then spiking back up. Much more differences, we got these volume spike bars. So if you like volume, then you definitely are going to want to trade time based bars.
BEST TICK CHART FOR ES
Another benefit of candlestick time charts on the ES (S&P E-minis), Forex or stocks is if you rely on candle sticks a lot, time based bars create better candlestick patterns. And part of the reason for that is again, tick bars create not only more evenly leveled volume patterns but also they don’t create the real wide range bars as much as time based bars do. But candlesticks, one of the ways to read candlesticks is to look for those wide range bars. Those give some nice, very nice patterns. And it’s part of reading Japanese candlesticks patterns.
So on candlestick bars, time-based bars, you are going to get narrow ranged bars, and then you are going to get real wide ranged bars. So again the disadvantage of that is you are risking more on trade, on the swing highs and swing lows. But if you rely on those candlestick patterns, you’re going to get better candlestick patterns on time charts.
DAY TRADING TICK CHARTS
So which one is better? Neither one is better. It’s just a matter of which one fits your personal preferences for the way that you trade. And just be aware that there is pluses and minuses and choose the ones that are important to you.
BTW, if you’re interested in the indicator that I use personally for very precise entries and exits. I’m happy to share that with you. Just send me an email at support@topdogtrading.com, and I’ll show you how to get access to that indicator.
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