[eurotrader]

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.

[Tams]

Originally Posted by eurotrader »

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.

[sevensa]

Originally Posted by eurotrader »

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?

[brownsfan019]

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

[HAL9000]

And I would like to add: Add range bars too.

I recently discovered them for myself,
and at least for me, their use makes sense.

[eurotrader]

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.

[sevensa]

Originally Posted by eurotrader »

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.

Originally Posted by eurotrader »

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.

[eurotrader]

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.