Lets see how I go bro,
- From what I have read so far on your post re tick chart trading, you don’t use moving averages and other indicators like RSI, CCI and Stochastic. Is this correct?
I don’t use indicators, I used price action. Support/resistance. Fib retracements and expansions. Donchian channels and Ichimoku. Fundamentals and news. But that’s me bro. The technique I describe in this thread is but one of three strategies I have in my tool bag. I hope to add 2 new strategies this year. Any technique and/or indicators you use are just as valid on tick charts as time-based. Maybe more-so. So your work with MA’s, RSI, CCI and Stoch’s can be applied to tick charts.
- In your opinion, is using tick charts more suited to trading the lower time frames - like the 1-minute?
IMO, any-one using time-frames less than 1 hr in their trading plan can benefit by switching to tick charts.
- Are different time-frames utilized in tick chart trading? For example, in MT4 you have the option to select Monthly, Weekly, Daily and down to 1 Minute.
On tick charts the “time” frame is the number of ticks it takes to form a candle. You can have a 2 tick chart. A 34 tick chart. 100 tick, 200 tick, 233 tick, 500 tick, 550 tick, 1000 tick charts. It’s completely up to you and how things relate back to your trading methodology. But you must remember what a tick is and what it means.
Each tick represent one completed transaction. I sell 1 lot of EURUSD and you complete the transactions by buying my 1 lot. This occurs hundreds of thousands of times every day. If we’re lucky you and I might trade 1 lot at a time. The real players are handing over 5 more probably 10 million dollars cash each and every time. But being a decentralized market, we don’t get to see that volume, we see the completed transaction as a tick. And again because of decentralized you don’t see every transact. The volume of transactions will depend on your brokers liquidity providers which in turn is dependent on their providers as you follow the money makers chain up to the big banks. There is about 10 of them and they set the price and spread. These 10 or so banks handle 90+% of the physical cash transactions that form the total daily volume that is the forex market. Here the USD rules and most tranactions are against that it. So if the bank wanted to buy EURJPY like you and I would they sell their USD and buy EUR’s and at the same time sell their JPY in order to buy back their USD. Thats what we are watching on tick charts. The actions of the real players in the market as it is filtered down though the layers of money makers (liquidity providers) until it reaches you and me through our broker.
So what will be the right tick chart for you, well thats open for experimentation and is whatever works best for you. As I believe you are trading 1min and 5min charts I would suggest this process. Have a look at the average volume on the 1 min chart during the period you wish to trade. Use this as your first tick chart. Then simply multipy by 5 to reproduce the five min chart.
- In you post of 30 August '14, you stated that “3 or 4 candles can form in under a minute”. Please explain. Does this mean that the formation of candles is not dependent on the time frame?
The formation of a tick candle is completely dependent on market volatility. The more players there are in the market the more volatile the market is, the more transactions are made and the quicker a tick candle forms. So during news release when the markets are highly volatile you might see 10, 20 candles form in one minute. During mid Mon morning during the Japan session it might take 20 min to form One candle because there is no market participants and so no volatility.
Is demo / free tick chart software available? If so, please recommend a broker.
IMO, the best (and free) charting software out there is provided by Protrader - limitless trading. They also have an unlimited $100 000 demo account. But you have to search hard to find a broker that supports them to trade live. But that’s ok. This software is produced by a very new player in the market and their target market is the liquidity providers. By providing us the end user with the software free, we can then put pressure on our brokers to adapt it as part of the trading platforms they provide.
Also it has just become accepted practice that you [I][B]must use [/B][/I]the charting software provided by your broker. You don’t. As I said earlier, your brokers data feed is filtered as it passes though the various levels of money makers. By using independent charting software you get data secured from different sources providing a clearer picture of the market. ProTrader 3 secures their data from LMax. LMax is much higher up in the chain than my broker and as such provides 3 to 5 times the volume in transaction data.
I would suggest that once set up start with a 100 tick and 500 tick chart and go from there.
- In the future, maybe towards end January '15 once work is back to normal, would you be prepared to do some live trading - could communicate via Skype?
Bro, I’m not a teacher or mentor. Nor do I aspire to be. But I do like being an active member here at BP and sharing some of the techniques that have helped in my development. IMO tick charts are one of the best keep secrets when it comes to analyzing the markets. How you implement tick charts into your trading plan is up to you.
There is only a handful of us here and we all trade differently but we are more than happy to help out where we can. All the best in your journey bro,