[Longfellow]

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?

[AgeKay]

Originally Posted by sevensa »

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.

[Longfellow]

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.

[AgeKay]

You still have to look at volume, of course, but I would say it makes a lot more sense on a chart based on price changes.

[uexkuell]

Originally Posted by AgeKay »

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?

[AgeKay]

Originally Posted by uexkuell »

Which software would do this?

None that I know of (I wrote my own charts).

Originally Posted by uexkuell »

Could you please post a chart?

No, sorry.

[BlowFish]

Originally Posted by AgeKay »

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.

[AgeKay]

Originally Posted by BlowFish »

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.