| Tick Charts For Consistent Profits |
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| Written by Barry Taylor |
| Friday, 21 May 2010 19:37 |
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Stock and futures charts can vary based on time, type of charting, and the criteria used to define the chart. The ways that a trader can set up a chart are as numerous as the products that can be traded. Many investors tend to use only the most basic of setups, never realizing the inherent potential of other charting systems, most notably that of the tick chart.
Stock and futures charts can vary based on time, type of charting, and the criteria used to define the chart. The ways that a trader can set up a chart are as numerous as the products that can be traded. Many investors tend to use only the most basic of setups, never realizing the inherent potential of other charting systems, most notably that of the tick chart. Consider a Tick Chart Profitable traders enjoy the use of tick charts to help define the small price action trends in active markets. The tick chart enables you to see time, volume, and price all in one central location, whilst allowing for further analysis with other common charting indicators. You'll find that the tick chart affords you to see more information with less distractions. Who is Best Served with Tick Charts? Tick charts don't exactly work for everyone all the time. Short term traders will get the full benefit of a tick chart, while long term traders are best served to use them exclusively for entry and exit positions. Since the tick chart is generally shorter term, day traders and swing traders get a leg up, since the chart itself practically caters to the short term. How Tick Charts Work Tick charts reference price, time and volume, all coupled with the frequency of trades. Tick charts may appear to be vastly different than your ordinary candlestick chart, but they all acquire their data from the same place: the market. Fine Tuning a Tick Chart Just like any indicator or other charting system, tick charts have common settings that most traders use. Of the most common are the 33, 133, and 233, tick setup, which creates a new tick, or plot, on the chart each time 33, 133, or 233 orders are completed. The 33 setting is most widely used on low volume stocks or on very short timetables. Since it takes only a matter of seconds for many stocks to see 33 different transactions, they are best applied to high frequency trading strategies. Likewise, the 233 setting can be used by investors with a longer time horizon or on extremely high volume stocks. Advantages of Tick Charts Tick charts have the advantage of creating a chart based on both volume and price. This gives them a large advantage over other charts for investors interested in momentum trading. High volume means there will be more ticks, while low volume means less frequent ticks, thus investors have a general idea of how strong or weak a trend is based on the ever changing number of ticks appearing on screen. Try Tick Charts for a Week Do you remember the first time you looked at a candlestick or a bar chart? Investors are best served to give tick charts a try for a short period of time just to see the benefits they serve. Although very different from the line charts you commonly see, tick charts provide far more information and are generally better all around. Give tick charts a test drive - we're sure you'll be glad you did. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Learn more about volume patterns and how they can help your trading profits by visiting Barry Taylor's blog, which has been discussed by Reuters, Ninja Trader, Yahoo! Finance, and many others, at http://Emini-Watch.com. |