Introduction to Tick Charts
As opposed to time-based charts which many traders will be familiar with, Tick Charts show realtime data as it happens. Tick Charts are therefore considered price-based charts. Tick Charts are used for both forex trading and stock trading. While fundamentally they do the same thing in both markets, which is to show charts based on data as opposed to time, it’s the data which is used which differs.
Tick Charts on a stock trading platform will be based on the most recent transactions or trades based on the order book of the exchange where the stock is listed. Tick Charts on a forex trading platform like cTrader will show every new price update from a liquidity provider. This is because forex trading is decentralized and there is order book exactly. Therefore trading decisions are based on the liquidity provider. The frequency of price updates is a good indicator nonetheless.
Tick Charts on cTrader
A unique feature of cTrader from the early days has been the availability of Tick Charts. This feature goes hand-in-hand with the Level 2 Pricing capabilities and Depth of Market features. The option to switch to Tick Charts is easy to find. As you go to change the timeframe, you will see multiple columns of options. Each column represents a chart type. The desktop version of cTrader additionally has Renko and Range charts which are other types of price-based charts.
The list gives a choice of the time period (for time-based charts) or volume of price updates to complete the period. Tick Charts can range from 1 tick, all the way up to 1000 ticks, with a number of options in between. The Tick Charts in cTrader are compatible with all chart types. There are Bar Charts, Candlesticks, Dot Charts, Line Charts and Heiken Ashi.
Why Forex Traders Use Tick Charts
Tick Charts are usually appreciated by scalpers who are looking to make a quick entry and quick exit. Breakouts usually show sooner and trends appear clearer. Besides this, a lot of traders believe that they are quick useless when it comes to the forex market since they can never give the entire picture to a retail trader. The forex market is truly massive and as mentioned before, decentralized. Retails traders will typically only see the liquidity which their broker has from their liquidity provider and that is only a piece of a gigantic puzzle.