Many day traders find that tick and times charts are important for them. With tick charts, the trader will see a new bar created following the previous set number of trades that people usually call as a tick. On the other hand, time charts create a new bar based on a specific time frame. Traders can set the different periods of time frame they want to use with the time frame.
When traders find confusion to either use a tick chart or time chart, they need to check the basic benefits and drawbacks of those two kinds of charts, first.
The Basic of Trading Charts
The common chart traders use are candlestick charts and bar charts. They both provide traders with the same information. Their biggest difference is in their display. Candlestick chart has a better colorful code than the bar chart.
With these two charts, traders can use it to see the price bar either with tick or times.
The Definition of Time Chart
With time chart traders can be used in various different timeframes, like one minute, two-minutes, or five-minutes. Traders can see a new price bar in every one-minute, two-minutes, or etc., depending on the timeframes they have set.
In a time chart, commonly, traders will get a uniform x-axis price chart since each price bars are evenly spaced. If there is at least one transaction on the asset that a trader follows each hour, there will be sixty price bars every hour.
For day traders, the one-minute time chart is the most popular one. This chart can show way more information in a time when there are only a few transactions. It keeps showing more bars even when there are only a few transactions.
Defining Tick Chart
On the other hand, with the tick chart, the price bars will be based on the number of transactions. For instance, a 512 tick chart will have a new bar in every 512 transactions.
This type of chart allows traders to customize the number of transactions, such as 5 ticks or 1254 ticks.
In a day, a trader will face an active (where there are many transactions) and slower times (where there are few transactions). Thus, the x-axis on this chart will never be uniform.
During the open hours of the market, the tick bars will come out very quickly due to the volatility. At that time there can be five tick bars in a single minute. Contrarily, during lunch hours, when the volatility of the market decreases, there will only be a single bar in five minutes.
With this chart, traders will not get the illusion of activity on the market since the bar will appear after there is a sufficient number of transactions.
After all, a single type of chart is not better than the others since they work differently with different day trading strategies in a different market condition.