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eurotrader

Tick Vs. Time Interval Charts

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I'd like to open a topic for discussion and to see what various traders opinions, pros and cons, are of tick vs. time interval based charts. For example a 144T vs. a 2 minute chart.

 

One view is that a tick based chart can present a smoother presentation of price. This is particularly true during quieter periods of trading. A tick based chart will form a bar upon completion of the selected number of trades. A time interval based chart will complete a bar at the end of the time period irrespective of whether any trades have taken place or not. A tick chart could therefore present a smoother flowing chart as well as be more accurate on a technical basis.

 

Would the above necessarily be the case during faster markets? Would a time based chart be better? Combinations of the two, for example short term chart on a tick chart, long term on a time based chart? I've noticed that sometimes it is easier to pick up patterns or S&R areas on a 5 minute chart and base entries/exits off an 89T chart.

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  eurotrader said:
I'd like to open a topic for discussion and to see what various traders opinions, pros and cons, are of tick vs. time interval based charts.

For example a 144T vs. a 2 minute chart...

 

 

have you observed any differences?

 

can you post a chart example?

 

 

maybe different time of the day will behave differently? I don't know.

would opening trade behavior different than midday?

I think it is worthy of a study.

Edited by Tams

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  eurotrader said:
I'd like to open a topic for discussion and to see what various traders opinions, pros and cons, are of tick vs. time interval based charts. For example a 144T vs. a 2 minute chart.

 

One view is that a tick based chart can present a smoother presentation of price. This is particularly true during quieter periods of trading. A tick based chart will form a bar upon completion of the selected number of trades. A time interval based chart will complete a bar at the end of the time period irrespective of whether any trades have taken place or not. A tick chart could therefore present a smoother flowing chart as well as be more accurate on a technical basis.

 

Would the above necessarily be the case during faster markets? Would a time based chart be better? Combinations of the two, for example short term chart on a tick chart, long term on a time based chart? I've noticed that sometimes it is easier to pick up patterns or S&R areas on a 5 minute chart and base entries/exits off an 89T chart.

 

Bold added by me to reference what I am commenting on. Why do you think bars based on an arbitrary number of ticks would be more accurate on a technical basis than bars created based on an arbitrary time period?

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Thanks for the replies guys.

 

Sevensa you commented "Why do you think bars based on an arbitrary number of ticks would be more accurate on a technical basis than bars created based on an arbitrary time period?" You are correct in saying "arbitrary". I think any interval chosen by a trader can be pretty much arbitrary since it is based on the preference of the trader. My only thought on accuracy would be the case of a slow market where there are minimal or no trades during a given time period. A time based chart would print as a succession of dojis or very small range bars which would have an effect on any indicators or moving averages the trader uses. A tick chart could help alleviate that. I noticed that a tick based chart can give a much smoother presentation during these times. Just my thoughts.

 

Tams, I trade the Euro Stoxx 50 which can be very slow during the first hour so I have noticed a difference between a tick chart and a time based chart. What you might want to do, which might be easiest, is to look at whatever time-based chart you are using next to a tick chart. In particular during what you know to be a slow time of day or during the globex session. Also look at the regular session so you can compare both. Play around with various tick intervals and compare to the time period you use. This way it will be your charts with your indicators, if any, on your software and give you a much better picture.

 

HAL9000 and brownsfan019, the topic is open ended so would definitely be interested in your views on range and volume based charts vs. time or tick based charts. The idea behind the topic is to get people to share their experiences and pros/cons of different type charts. So would definitely be interested to hear your views on these.

 

Oh, I've also noticed that with a tick based chart it is can be easier to gauge the pace of the market. When the market is fast the bars form much quicker, vice-versa when slow. Can't get that with a time based chart since 1 minute is always 1 minute regardless of pace.

 

Cheers.

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  eurotrader said:
My only thought on accuracy would be the case of a slow market where there are minimal or no trades during a given time period. A time based chart would print as a succession of dojis or very small range bars which would have an effect on any indicators or moving averages the trader uses. A tick chart could help alleviate that. I noticed that a tick based chart can give a much smoother presentation during these times. Just my thoughts.

 

This assumes you are using indicators. Besides, indicators are trying to tell you what the market is doing, so if the market is forming small bars, going nowhere, this should affect the indicator as this is the whole point of using an indicator. For example if you are using a moving average, a series of small bars going nowhere would flatten the moving average telling you that the market is going nowhere, to stay out and a potential breakout might be coming. Indicators will look different based on the type of bars you use, but that doesn't mean one type is more correct than the other.

 

  eurotrader said:

Oh, I've also noticed that with a tick based chart it is can be easier to gauge the pace of the market. When the market is fast the bars form much quicker, vice-versa when slow. Can't get that with a time based chart since 1 minute is always 1 minute regardless of pace.

 

One can probably see this with volume as well. Fast bars, normally are on higher volume, so on your 1 minute chart you will see the volume spikes.

 

I don't think you can say one type of bar is better than others. Any bars are formed on arbitrary numbers you select, whether they are ticks, volume, range, or time. The best type is the one that fits you, but there is no magic type of bar that is the holy grail.

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Agree 100%, there is definitely no holy grail in trading and you are better served by not wasting valuable time looking for it. Hopefully through this topic traders will share their views on various chart types and provide some food for thought to others. The biggest service I think a trader can do for his/herself is find a simple system that works for them and use it as the foundation. Then keep an open mind for ideas that come their way and improve the basic system. Hence this topic. Cheers.

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Good topic. If I give you one dollar over the next five minutes, (time), that is one thing. If I give you 50 cents twice, (two ticks), that is the same thing. If I give you one million dollars, (volume), it won't matter to you how long it takes to deliver, or if it is in installments. So, what moves the market, and what should your chart measure?

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  sevensa said:
Any bars are formed on arbitrary numbers you select, whether they are ticks, volume, range, or time. The best type is the one that fits you, but there is no magic type of bar that is the holy grail.

 

I think the best charts are based on price changes (like P&F) because that's what traders care about (P&L). My favorite chart is one that shows you each individual price change based on the inside market because that is the only chart that does not require arbitrary parameters and it makes S&R easier to determine.

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ok. So if I want to move the (appearance of ) market by price, I could do that with one tick or one low volume trade. So the question becomes: is the (appearance of) market being moved by low volume, single trades? If the answer is yes, then I would suggest that the real market is better revealed through volume.

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  AgeKay said:
My favorite chart is one that shows you each individual price change based on the inside market because that is the only chart that does not require arbitrary parameters and it makes S&R easier to determine.

 

That sounds convincing and interesting.

 

Which software would do this?

Could you please post a chart?

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  AgeKay said:
I think the best charts are based on price changes (like P&F) because that's what traders care about (P&L). My favorite chart is one that shows you each individual price change based on the inside market because that is the only chart that does not require arbitrary parameters and it makes S&R easier to determine.

 

Not sure I have this clear you show 'ticks' based on best bid best ask? Similar to how FX ticks are reported? So if the bid or ask changes you plot a new price point? Just trying to be clear what you are doing.

 

As to which charts to use it depends what you want to see, For example price rejection often happens quite quickly so time based charts often show this well with 'tails'. Constant volume charts definitely look smoother to me. They are great for drawing/seeing trend lines for example.

 

What you are doing is holding a different variable constant to determine your 'sample' for a chart. Price Time or Volume (ticks are a bit of a wierd one most akin to volume). Constant Price, Time or Volume charts.

 

Ticks with a fast setting can be quite nice to see S/R holding as they often make flat tops/bottoms as price hits a wall of other side orders.

 

Horses for courses.

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  BlowFish said:
So if the bid or ask changes you plot a new price point?

 

Yes, but currently only if there were also trades at that bid or ask, I might change this in the future though. This is how I think of price changes when I watch the order book so it makes natural sense to me to plot it that way. I would not use it with FX though because volume plays a big part on those charts.

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  AgeKay said:
Yes, but currently only if there were also trades at that bid or ask, I might change this in the future though. This is how I think of price changes when I watch the order book so it makes natural sense to me to plot it that way. I would not use it with FX though because volume plays a big part on those charts.

 

Thanks for clarifying. Incdidentally that is exactly how FX volume is reported (the order book is used as a proxy as there are no reporting requirements) but that's a bit off topic.

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  brownsfan019 said:
You should include volume based charts in the discussion as well.

 

Right on BrownsFan.

 

Price is not motivated by the passage of time, but rather, is motivated by the occurence of trade and more specifically an imbalance to the buy or sell side within that trade.

 

Tick charts record transactions and treat each transaction equally regardless of size. When measuring trade or the imbalance in trade how useful can a chart that treats a 1,000 lot the same as 1 lot be?

 

Below is a Volume Chart (4k) of the last half hour of yesterday's trade in the emini S&P showing flat prices and an indicator which is our calculation of net trade by commercial traders.

 

While prices are flat the indicator, based on an imbalance of trade, shows net distribution - THE PRO's WERE SELLING THE CLOSE. The result was an immediate drop that continues as I write.

 

Price does not predict price - it is the balance or imbalance in order flow/trade that motivates price and in most cases it is apparent before price responds. That imbalance is best read on Volume Charts not price or tick charts.

 

close.jpg

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All bar charts and candle stick charts - based on ticks, volume, price or time - have one big flaw with regards to volume. You don't see how much volume was traded at each individual price, only how much traded at a range of prices, which makes it pretty worthless in my opinion.

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Great topic, My 2 cents. low Tic, Vol and range bars will make your indicators fire off faster. So if that is your goal maybe they will help. but Indicators only tell you what price action is doing. I would study price action and price action patterns. I like using the five minute chart and I look for spots were early shorts or longs got sucked in and are jumping out. most of whom are using tic vol range and 1min charts. When they are forced out of their trades they are driving the market in my direction.

 

Also I find it hard to trade with an absent of time. just watch an emini 5 minute chart for a day and pay attention. don't be checking email and IMing. watch the chart. You will see a number of times through out the day that a bar will sell off and stay at its low but just before the bar closes it will shoot to the top of the bar and makes a bull close. It happens all the time. The 89 tic and it indicators are all saying sell. and now your trapped short. Also watch major closes. your 15, 30, 1hr closes.

 

 

I hope some of you try this and give feed back.

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  uexkuell said:
That sounds convincing and interesting.

 

Which software would do this?

Could you please post a chart?

 

I believe TradeStation displays inside bid/ask.... however, I'm unsure if it displays historical information or displays based on how long the chart is kept open.

 

 

Rahul

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  BlowFish said:
Not sure I have this clear you show 'ticks' based on best bid best ask? Similar to how FX ticks are reported? So if the bid or ask changes you plot a new price point? Just trying to be clear what you are doing.

 

As to which charts to use it depends what you want to see, For example price rejection often happens quite quickly so time based charts often show this well with 'tails'. Constant volume charts definitely look smoother to me. They are great for drawing/seeing trend lines for example.

 

What you are doing is holding a different variable constant to determine your 'sample' for a chart. Price Time or Volume (ticks are a bit of a wierd one most akin to volume). Constant Price, Time or Volume charts.

 

Ticks with a fast setting can be quite nice to see S/R holding as they often make flat tops/bottoms as price hits a wall of other side orders.

 

Horses for courses.

 

Ticks and Volume have been shown through various research studies by the CME (I believe) to have a high degree of correlation... meaning you can use either.

 

Rahul

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  eurotrader said:
Agree 100%, there is definitely no holy grail in trading and you are better served by not wasting valuable time looking for it. Hopefully through this topic traders will share their views on various chart types and provide some food for thought to others. The biggest service I think a trader can do for his/herself is find a simple system that works for them and use it as the foundation. Then keep an open mind for ideas that come their way and improve the basic system. Hence this topic. Cheers.

 

Hi all,,

I preffer trade without indicators, I dont need them, altho, I can use a couple of them very efficiently, like the WCCI or the MACD(4,5,13); both pattern oriented.

I use RangeBars for my charts. The size range varies from 1 pip to whatever size needed to adapt accordingly to market conditions.

My method is pure simple technical analisys; higher highs= buy, lower lows=sell. Im experimenting with a demo and use low risk management. The results are incredible and I would like to invite you to view my trades live and give me your honest opinion. By the way, I have 9 very hard years experience in this trading world.

This is the URL to view how I trade https://www.gotomeeting.com/join/230311986

You may have to give me a knock; the room is not always open; I have my own work to do too other than trade.

 

Catorpega

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Indeed though I thought AgentKay was talking about 'order book' ticks i.e. not generated by an actual trade (similar to how FX data providers generates ticks). It is my experience that using those as a proxy for volume is not nearly as useful as 'real' ticks. That's not to say the information is not useful, its just rather a dubious proxy for volume.

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