A Guide to Trading with Tick Charts

Breaking Free from Time: A Guide to Trading with Tick Charts

If you’ve been staring at 1-minute or hourly charts wondering why the market moves the way it does, you might be looking at the wrong variable. Most traders are conditioned to view markets through the lens of time, but what if you could view markets purely through activity?

In a recent tutorial by TradingView, they unpacked a powerful feature for professional traders: Tick Charts. Here is a breakdown of what they are, how they differ from traditional charts, and how you can use them to sharpen your market analysis.

What Are Tick Charts?

Standard candlestick charts are time-based. A “Daily” candle closes after 24 hours, and a “5-minute” candle closes after 5 minutes, regardless of whether 1 trade occurred or 1,000 trades occurred.

Tick Charts are fundamentally different. They do not care about time; they care about transaction counts.

• A 10-Tick Chart: Creates a new candle after every 10 transactions.
• A 100-Tick Chart: Creates a new candle after every 100 transactions.

This removes the “noise” of slow trading periods. If the market is dead during lunch hour, a time-based chart will keep printing flat candles. A tick chart, however, will simply pause and wait for the next set of trades to fill the candle.

The Liquidity Factor

One of the most fascinating aspects of tick charts is how they visualize liquidity and volatility.

• High Volume Stocks (e.g., Meta/Facebook): On a 10-tick chart, candles form rapidly because thousands of trades happen every minute. The time spacing between candles might be milliseconds.
• Low Volume/High Price Assets (e.g., Berkshire Hathaway Class A): With shares trading near $689,000, trades are infrequent. A single 10-tick candle might take minutes or even longer to form.

By looking at the x-axis (time) on a tick chart, you can spot inconsistency. If the distance between candles widens, trading is slowing down. If it shrinks, activity is exploding.

Volume vs. Ticks: A Crucial Distinction

It is vital to understand that a “tick” counts a transaction, not the size of that transaction.

• Scenario A: Trader buys 1 share of Bitcoin. (1 Tick)
• Scenario B: Trader buys 100 shares of Bitcoin in a single market order. (1 Tick)

Because of this, a 100-tick candle doesn’t tell you the volume traded, only that 100 interactions occurred. To get the full picture, you should add a Volume Indicator to your tick chart. This allows you to see if those 100 trades involved heavy institutional buying (high volume) or just retail noise (low volume).

Strategies for Analysis

Tick charts open up a new dimension for technical analysis:

1. Trend Confirmation

You can draw trendlines and support/resistance levels on tick charts just like standard charts. Often, a tick chart will reveal a breakout before a time-based chart does, simply because it reacts to the surge in activity immediately rather than waiting for a clock to tick down.

2. Moving Averages

Indicators work on tick charts too. You can apply a Simple Moving Average (SMA) to a 1,000-tick chart. You might find that price respects the SMA more cleanly on a tick chart because it is following the flow of money rather than the flow of time.

3. Multi-Frame Analysis

The video suggests a hybrid approach. You might see a breakout on a 1,000-tick chart, but when you switch to a 10-minute chart, the price is still below a key average. Using both views helps you decide if a move is premature or confirmed.

Conclusion

Tick charts offer a granular, “under-the-hood” look at market structure. They are particularly useful for spotting institutional footprints and filtering out periods of low activity. While they are an advanced feature (often requiring paid plans on platforms like TradingView), they provide a crisp perspective that time-based charts simply cannot offer.

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Disclaimer: This blog is for training and learning purpose only.

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