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Tick Charts - How to Use Them

Discussion in 'Forex Discussions' started by painofhell, Feb 29, 2016.

  1. painofhell

    painofhell Content Contributor

    Jun 24, 2015
    Likes Received:
    What Are Tick Charts?

    Tick charts, unlike the conventional charts, draw a bar after a predefined number of trades. They are solely based on trading activities. These type of charts are popular among the busiest traders, and can provide detailed information about the trading activity in the markets.

    Calibrating Tick Charts
    By utilizing the SMA, which acts as a resistance/support line, traders use tick charts that draws a bar after every 1-2 minutes on average. A trader may need to experiment a bit in order to get an appropriate tick count. Standard trading session goes on for 390 minutes. A trader should develop a tick chart that can produce around 250-350 bars every session. Trying and adjusting the tick count and size is important. That is, as the numbers of bars vary everyday depending on activity and volume of transactions.

    Find Out a Combined Support/Resistance Line
    Here is how to get support/resistance effect. When using tick charts with 250-300 bars you need to be capable of applying a 12-period moving average on the chart. You can use the same 12-period SMA support/resistance line on different charts. That, after creating the base tick chart. If you double the number of bars on a tick chart, you should also increase the number of bars used in the SMA. You do it while using the same ratio in order to get identical support and resistance effect.

    Using This Tick Chart Setup for Forex Trading
    With the help of tick charts, traders can find out whether their instruments are currently trending or not. If a tick chart implies that a particular instrument is trending, then it’s supposed to be the best assumption until proven otherwise. Similarly, if the instrument is operating as if it is not trending, then that should be assumed to be true until proven otherwise. During a trend, the 12-period SMA acts as a support/resistance line on the base tick chart. Thus, in such cases, prices of currencies will bounce off the 12-period SMA line instead of slicing through it.

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