Profiting from noise. Price Action Trading on tick charts

G’day all and welcome to the heart pounding lucrative world of Price-Action trading on the tick charts.

Although the popular censuses is that trading off the higher timeframes is the safest and more proven technique when it comes to trading Forex, the reality is almost all will “fall and stumble” on their first attempt. Some will get back up on their feet and try again, some will walk away as failures. Those who survive can spend years and lose $1000’s in money before having that eureka moment that turns their trading around. But it doesn’t have to be that way.

One of the best keep secrets in speculating is that the most optimum and consistent returns can be made doing nothing more than trading a singular pair on the lowest of time frames, the tick chart. Here I hope to start a thread where those who exploit this trading style will gather and share their knowledge. And those who new to this methodology can freely ask those “dumb” questions because I believe there is no such thing as a dumb question just a dumb answer.

First a bit about myself. I’m a production manager for a dairy company. I make things out of milk. I’m a third year speculator. So I am no trading guru, master or teacher. I am just an everyday Joe type speculator that struggles to comprehend the sheer complexity that is the Forex market. I don’t learn through theory, I can’t teach theory. I learn hands on, doing and I’ve learnt my lessons the hard way and that’s in the hip pocket. BP’s is littered with some of my epic failures. I spent two years trying to “master” the higher times before I got a copy of “Forex Price Action Scalping” by Bob Volman for Christmas last year. For all those serious about trading the tick charts it is a must read. I am now a convert and its turn my trading around. Any techniques I refer to in this thread will be based on Bob Volman’s methodology. I take no credit for them. My motivation behind the thread is that it becomes a place I can document my thoughts and journal some trades. Others will share theirs and we all can then reference them for future use. So all opinions expressed are my own and should not interpreted as factual. Indeed I hope that those who’s knowledge far surpasses mine will actively critic my views.

The pair we are working with is of course the EURUSD. All charts I reference will be of this pair. I do believe that the GBPUSD, AUSUSD and USDJPY can also be traded in the same manner but then again why.

Look forward to meeting fellow speculators using this technique and I hope a couple of members I know of who use this methodology will join us.

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What is Price Action Trading on the Tick Chart?

To me price action is literally everything a securities price does in relationship to time. It is purely subjective and no two speculators will interpret price action the same. Most users of PA trade on higher time frames but it is a legitimate analytical tool on the tick chart.

On the higher time frames proponents consider swing highs and lows, support and resistance, candlestick and chart patterns etc. On the tick chart we concern ourselves in the here and now. Only the last couple of hours trading really influences our trade decisions. Are the highs forming higher or low. Same with the lows. These will form our support and resistance levels on our chart. What is the range between these levels, is it tight and consolidating or is it wide and whipsawing. Where is the price in relation to the rounded numbers level of 0000, 0020, 0040, 0050, 0060, 0080. What is the current trend? Rarely will we trade against the trend. However the same method that generates our entry point with trend will produce a valid entry point countertrend. There is literally dozens of valid entry signals generated each day. The skilled practitioner knows that all he has to do is capture one or two of those to see their account grow. Timing then is everything.

This is a key point, time of day dictates how we trade. This methodology can be traded 24/5. One advantage we as speculators have is that the reality of our trade ever getting to the Spot Forex market is about as likely as me getting a hole in one at golf. It just isn’t going to happen. That’s because the market is about the world of financial organizations, Money Makers, not us speculators. We are merely taking a variable odds bet on what the market will do next based on our analysis of the here and now. These financial organizations however operate by business hours and many traders take advantage of that fact. The London break out strategy is the obvious one to come to mind. As each market comes on line and then off, the tick trader can watch and get hints to what the rest of the day’s activities might entail. How one manages a trade will vary during the different sessions.

Fundamental analysis also plays a part in trading the tick chart. Although we are more concerned with capturing price moments during the intraday trading period where price is controlled by the institutes, fundamentals govern the bigger picture and it takes a sustained effort from the market to reverse the overall trend. Researching and staying on top of “news” takes up very little time and quickly becomes part of your trading ritual.

The rule of thumb is to trade the trend. The beautiful thing about trading a solitary pair is after about three weeks of trading you quickly develop a bias toward either looking for long or short signals and trade only one side. But no matter how strong a trend is, the market will always correct itself. It may be swift and last only a few hours, it might drag on for a day or two. It could drag on for months. Being able to identify the trend vs correction vs reversal gives the speculator the ability to respond to the here and now of market conditions ensuring they’re on the right side of the trade.

Also trading this methodology opens the trader up to the opportunities that arise during news release. These opportunities are the most lucrative with double digit returns possible. They are also the most risky as you will be trading when the market is most volatile and liquid. There is no guarantee that you will get into a trade at the price you want or out for that matter. Slippage can be hell. As much as you stand to win you can equally loss. But again our advantage is that it’s the same market players trading the same news at the same time of day each and every month. They leave the same evidence behind on the tick chart to which we the speculator can identify and trade according to.

Things are seen in a different light, a fresh perspective on the tick chart. What is considered noise by many is purely evidence of the actual money makers activities that present themselves day in day out. The battle between the bulls and the bears. It’s just like a self for-filling prophecy, by nature of their own operations, there are times of the day that this battle stalls, the price goes flat and neither side can dictate direction. This might last just minutes like during a speech from a reserve bank chair or the opening of the London session. It could develop over hours like the lead up to NFP data. The same money makers agents trade these same events and they are governed by their corporate policies. Like it or not they leave clear patterns of evidence of their activities. Essentially we are looking for the market to stall and trade flat within a range. The tighter the range, the longer it takes to form and the more trades that where made within the range the better. This is pressure building up between the bears and the bulls and eventually one side has to give. The longer that pressure builds up the more explosive will be the breakout. When it does the price moves and moves quickly as other agents spot this movement and try to get in on the action. We see this in real time on a tick chart and can trade immediately so maximizing the potential return of the trade. Often we are in and out, banking our profits before many have time to even contemplate that a potential trade exists.

Finally at this point, Price Action Trading on tick charts is about disciplined Money Management (MM). One vital aspect the speculator has to come to terms with is the high Cost of Trade (CoT - not to be confused with CoT as in Commitment of Traders data).CoT includes aspects such as spread, commission, slippage and swap. By far the greater majority of trades will only produce single digit pip returns. A 2 pip win with a 1 pip CoT and you’ll lose 50% of your profit in fees. A 5 pip win loses 20% and a 10 pip win 10%. Slippage only compounds the high CoT. Suffer a 2 pip slip entering and exiting a trade at 10 pip Take Profit and now 40% of that profit is gone. The effect is even worse on a losing trade. Example, you enter a trade with a 4 pip Stop Loss and 2% risk. It all goes wrong from the start, slippage causes you to lose 2 pip straight away. Before you have time to place your SL the price blast through that level and you exit only to have 2 more pips lost to slippage. Bang you lose 8 pip double the original target. End result 4% lost from your balance. Bit of an extreme example but nevertheless a probable case scenario to this style of trading. This however is not to be feared. It just merely has to be understood. It helps the speculator evaluate whether a trade signal will produce the desired result. Remember there will be numerous opportunities to trade though out the day. You don’t have to trade every one. Just the right one. Later on I hope to go into MM in more detail.

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Reserved for later use a

Reserved for later use b

Reserved for later use c

Lets have a look at a trade. At this point we won’t break it down to much but its a good example of what it is we are doing

Most will recognize it as a simple breakout. A New York open breakout from today. If a PA trader on a 4hr or daily chart had seen this pattern they would of traded it. We had all ready prepared for where our entry will be at the resistance level at approximately 1.32040, we knew where to place our SL. My rule is the second last swing low. That’s approximately 5 pips from or entry so I will use that to place a SL. Knowing our SL means we have a lot size ready to match our risk.This is a quick in out trade so we must be ready. Always calculating for a 1:1 R:R we have a TP target set at approximately 1.32090 but we will let PA determine when to exit. Right at our entry level a tight box range forms then breakout. The price shoots straight up to our TP level. A pin bar followed by a bearish reversal would trigger trade exit in any PA traders book so that’s what we do. 5.3 pips just like that. Less Commission of 7 points and our 5 pip risk returned 4.6 pips so at trade risk of 2% returned a 1.84%. Do that 20 times a month and you’ll like your balance

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Good Luck with the thread. Looking forward to it.

Cheers bro. Suppose time will tell.

Good luck, will be checking this thread out again for updates…

Thanks bro. This style of trading definately gets overlooked. But as it is above so it is below.

Oh isn’t the market wonderful. Been waiting all day for for durable goods data. It’s time. All exited. Little puddle forming at the feet. There it is, mmm mixed look to BUY. Great there’s a long break go buy. And then you go hit the SELL BUTTON. OMFG! Dumb dumb dumb ralmao! Hey, what can you do, accept and move on. But just to add a bit off salt into the wounds because I thought I had a long trade on I managed it like a long trade. Lets just say lucky the price didn’t break, who knows what that could of cost.

So what happen on the chart, below is a 70 tick chart just after the release of Durable Goods data.

First thing on my mind is that bloody 1.32000 level. Price has stalled completely at this level since market open this week. Something has to give its only a matter of time. Will durable goods be the trigger. Possible yes, probable, mmm, no. Consumer Confidence due in 1 1/2 hr more probable then. Still not going to stop us from getting a trade or two in. And we found two, just cause I stuffed up one, it was still there. On news I like to trade box breakouts in the direction of the data. Tonight Core durable goods was weaker than expected so I look for long signals. A RULE. Always wait until one bar has formed after news release before entering. ANOTHER RULE. He who hesitates loses. Things can happen (they didn’t this time) very quickly. If your not ready the market will eat you up. Lots of practice is required before you start trading news. Good news there is there’s always two or three a week so it doesn’t take long to get into the groove.

“A” and “C” are the two entry points. You can see the box breaks. Both of them bounced off the 1.32000 level and I exited immediately. One thing about this style of trading is that almost all trades entered will go into profit. But as quick as a trade can go into profit it can turn. You have to accept this and lock in your profit. The old saying don’t let a winning trade turn into a losing trade comes to mind. So if the market gives you any indication that this current push has run out of steam then lock in your profits and be happy.

Stop loss for this trade was at 1.31850 being as it was the most recent lowest low and 7.5 pips below our box upper level and as always we size our lot against risk. The first trade yielded 5.9 pips and the second 4.3 pips. That’s 10.2 pips. Less 1.4 pips commission leaves 8.8 pips. Net profit 1.17% and theres still Consumer confidence to come. Actually thats now so got to go

Hi Bob, interesting thread. I have downloaded several tick charts on my MT4 demo. However, it is clear that the problem is going to be that of not being able to turn my laptop off without losing the data. What tick charting software do you use?


Unlucky my friend, don’t think I can help with that. I have the same problem. I use software provided by the good people at RainWood’s Forex Tick Chart indicator for MT4 . You pay a small price for a very powerful tool. In the right hands that is. I’m still chipping away at the jail wall with me toothbrush lol.

The drawback is MT4 does not store tick data. Any custom indicator you run must record and store tick data within MT4. So as soon you disturb the live feed (i.e. when you close MT4) this data feed is gone and there’s nothing to record. I wasted 12 months testing bots so leaving MT4 running in the background is not to much of an issue.

Of course there’s other options like running prorealtime software but call me old fashion, I like MT4.

Look forward to hearing some of your thoughts.


You’re welcome…and as for the thread, would definitely love to see more entries, and hope the newbies take care to review this thread…PA is what every trader needs to practice, and there are quite a few good sources for free info on it, apart from the YT webinars…

The posts will come bro. I’m very much time poor and there’s no markets you can trade for that lol. All work n no play makes bobby bill very anger and I need to take me tablets. You’ll find the more theoretical post will be made on the weekends. But as I said early, I don’t learn by theory nor can I teach theory. Most posts will be examples of trades taken thoughout the week and my mindset accordingly.

Didn’t take any trades last night, got called back to work last night with steam problems only to find one of my senior operators and his offsider up in the roof smoking cones. Lets just say they no longer work for me but their stash is now in my bowl. But now I have to find two new employees and cover the vacant shifts for the rest of the week. Joy. Trading may top up my super but work pays the bills still. And I love my work.

I’m hoping a few others will come and join us (Allen if your reading this I mean you - prove us wrong) as I’m very much still a student. But that’s why we’re here to share n learn from ours and others experiences.

All the best my friend


In my humble opinion, price action trading is the best way to trade.

Yes, took me two years and a couple of $1000 to come to that conclusion. Look forward to you criticing some of my views and sharing your experiences

So lets have a bit of a look at technique. The amazing thing about trading tick charts is that we don’t actually do anything different. The same price action that forms a 1 min candle, hourly or daily is the same price action that forms our tick candle whether it is a 70 tick or 4000 tick chart. Where our advantage lies is that we have effectively eliminated market noise by removing the volume variable for a set time frame. By focusing down on 34, 55 or 70 tick chart we can now see the very battle that exist between the bulls and the bears. And remember this is not your or my battle. It’s the worlds institutes, the money makers. And that’s what they do, make money. We are merely betting on the outcome of the battle.

One of our most powerful tools is the box break pattern. For our purposes we will define a box pattern on the 70 tick chart as :

 "a series of at least three candles where the highest high and lowest low of the first two candles form the upper and lower range of the box and the third candle's high and low form within that range. That range should ideally be between two to three pips only."

Here is an example of three box patterns, a 3 candle, 6 candle and 4 candle box

Being able to identify a box pattern is critical in my strategy as this is going to be my entry point into a trade. Like it or not, on an only too regular basis, all day every day, the price negotiations that occur between the bulls and the bears breaks down and stalls. Never party wants to give up ground and tension starts to build. The tighter the range, the more candles within the box, the more tension will build. Until finally when one party has to yield and the price breaks though that range. A Box Break.The greater the tension, the more explosive the break out move should be and easy pips are there to be captured. You can’t see that on an hourly or daily chart. But on a fast tick chart like the 70 it stands out like a sore thumb.

Now just because you have identified a box pattern doesn’t mean you have to trade it. There will be many box patterns form every day. The image above had three form in less than an hour. You only have to trade the right one. What the speculator has to do is assess the here and now of the chart and the context the box has form in. If you have in your mind only to enter long, why trade short if the price breaks though the lower (support) range. For me its best that I post actual trades and try to describe my mindset and what I see to describe that context. As I said previously, I don’t learn by theory, I can’t teach theory. I learn hands on by experimenting.

One final note, as we all know, there are no perfect examples in Forex. The speculator must bring a percentage of poetic license to the plate and understand that not all box patterns will fit the ideal model.

Hmmm… could you explain again whats the entry criteria after identifing the box patterns. Thank you

G’day anishrei. So the box pattern sole purpose is to identify an entry point for a trade. You enter your trade the moment the prices “breaks out” of the box in the direction you wish to trade. So there is two parts to this answer.

First the direction you wish to trade. We know that in advance. Because all we are worried about is the EURUSD, it won’t take long to develop a bias towards what direction you should be trading, long or short. I don’t think too many would argue against that in the here and now, short is the way to go. With that said, the market is always correcting so one must be open to trade in the opposite direction. I hope to post about direction of trade this weekend but it’s my boys 4th birthday on Sunday so my weekend is pretty full.

So in the here and now (which is what trading fast tick charts is all about) we are only looking to trade short. We now patiently wait until a box pattern forms in the right area of our chart. When the price breaks through lower than the low that forms the box (ie the box support level) we entry our trade. But the key is that the price must break though. As the bulls and bears battle it out trying to get a better deal, price will bounce around inside this tight boundary. It is very probable that the price will breech the high and/or low the first two candles by only 1 or 2 points then immediately reverse. They are still in battle so it’s not safe to enter the trade. As long as the range is still within that 3 pip boundary the box pattern is still valid. What you want to see is a swift strong clean movement of price though that level. When you see that, pull the trigger and trade.

It’s a very disciplined way to trade. Because these box patterns pop up all the time, you will be tempted to see something that’s not there. You still must see the chart as a whole and judge the merits of each box on its own. Remember you only have to take 1 trade a day with this methodology. Start to over trade in any degree and you will blow you account up very very quickly. Also things will happen very fast. 3 or 4 candles can form in under a minute. You have to be ready. Miss the opportunity and best wait for the next one rather than try jump on board.

All the best, Bob.