Quote from traderharley:
Hello Everyone,
I am new to day trading, and I use minute charts, and when I read here, many of you use Tick Chart to trade, what the advantage does Tick Chart have over Minute Chart? Thank you so much.
This question is like asking whether someone prefers red or white wine.
What about champagne?
Minute Charts = A time based chart where each bar contains a varying number of contracts or shares traded per bar based on the specific activity during the users define time frame of the chart and the time of each bars creation.
(Problem - The markets are traded in shares or contracts not time. Time being a huge variable, the volume weight of each bar is different throwing off the entire balance of the chart making any consistent evaluation of this chart or the individual bars are weak at best.)
Tick Chart = A transaction based chart where each bar contains a specific number of transactions per bar but a varying number of contracts or shares traded per bar based on the specific transaction's activity during the time of each bars creation.
(Problem - Similar to time charts, the markets are traded in shares or contracts not time or transactions. Time being a huge variable, transactions aren't any better since GLOBEX decided to split up transactions at their leisure. Again the weight of each bar is different throwing off the entire balance of the chart making any consistent evaluation of this chart or the individual bars almost as weak as the time charts.)
Range Chart = A chart where each bar's volume weight is based on a user defined price range. Once that range is exceeded, higher or lower, a new bar is created. The bars in this chart type contains a variable of transactions per bar & a varying number of contracts or shares traded per bar based on the specific transaction activity during the time of each bars creation.
(Problem - Similar to time charts, the markets are traded in shares or contracts not time, transactions or predicted ranges. Again the weight of each bar is different throwing off the entire balance of the chart making any consistent evaluation of this chart or the individual bars even weaker than even time or transaction charts because even more of a variable aspect of the chart is created by limiting the range of the bars.)
Volume Charts = A chart where each bar contains specific user defined number of contracts or shares traded, devoid of time, range or transactions. A smaller number of defined shares or contracts per bar, for a typically active symbol, shows as a faster chart and would be used for intraday or scalp trading. The larger the number of defined shares or contracts per bar, for a typically active symbol, the slower the chart and would be used for different lengths of swing or position trading. No individual evaluation of each bar is needed because they are equally weighted based on volume unless your method of trading is bar based, then the accuracy of this chart type improves your consistency 100 fold.
(Problem - The only problem here is getting traders or investors to admit (or even test) that eliminating the variable aspect of their charting is an improvement over the typical random chaos that their normal charts create. The markets are traded in shares or contracts not time, constant volume charts eliminate that purposely created variable aspect of charting. Eliminating the variable aspect of any equation is an asset and benefit not a liability. Here the weight of each bar the the chart is identical giving perfect balance to the chart so making consistent evaluation within this chart's price direction and directional strength stable and stronger than other chart types.)
I have yet to have anyone make a valid argument that purposely injecting a variable or chaos into a stable environment is a benefit to evaluating the outcomes created in that environment.
