What chart type? Time, tick or volume

[kiwi_trader]

Unfortuntately I trade HSI and Euro, neither of which really have the high volumes that make volume charts clearly better ... at least to me.

The argument about ticks being better than volume has some merit ... except that when you are at a potential turning point on hsi you often get a couple of big vol (relative) trades which appear to turn the tide. So in this case you might want the single ticks to carry more weight. This is also true of euro, perhaps more so although the time/action relationship is more interesting.

 

[guy2]

Nobody's convinced me yet that tick charts are better than volume charts although I think that an important point has been raised:

If you're making money with a strategy on tick charts then that's the most important thing.

The point I'm trying to get across is that volume never lies and it's volume that moves the market. In a tick chart, the 1 contract trader is given equal weighting to the 250 contract trader. Yes a 250 contract trader could break his trade into 5 lots of 50 each representing 5 ticks but he's not going to break it into 250 x 1 contract trades. Or is he? Does he have an automated system that feeds 250 contracts into the market as if they're single contract orders in order to manipulate the tick charts that people are watching?

Perhaps that's the most valid argument for tick charts: Tick charts are the best because if you use them then the chart can be manipulated by the big boys - how and when they choose. If they want to show many bars moving across the screen then the tell their systems to release all their orders into the markets as single contract orders one after another. This will cause the generation of more bars on your tick chart. If they want a long single bar on the chart then they execute their orders in the largest possible chunks - reducing the number of ticks going to your chart.

Perhaps the popularity of tick charts is just some big sinister ruse and game being played by the institutions and *them* to dupe the little guys...

 

[Bubble]

Guy, it depends on the strategy you use.
For mine, I need to have the $TICK and YM on the same chart. I can only use a time chart to do that.

After you mentioned this, I started comparing the charts to see if there was an edge to be gained. Though it is interesting how all three chart types are similar throughout the day in retrospect, during the day when the bars start moving quickly because of increased volume, you can definitely see the difference between low and high volume times. This can give an edge to a scalper. I do see your point.

What amazes me about the market is the vast choice of vehicles and methods to trade them. All can be correct.

 

[nononsense]

Quote from guy2:

[...]

If you're making money with a strategy on tick charts then that's the most important thing.

[...]

guy, you got the right answer.

Way back, I believe tripack did some rather much more interesting thread about different chart types.

nononsense

 

[guy2]

Here is TriPack's (very good) thread on the same subject:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=21739&perpage=6&pagenumber=1

 

[dbphoenix]

Quote from guy2:


Perhaps the popularity of tick charts is just some big sinister ruse and game being played by the institutions and *them* to dupe the little guys...

I don't know that I'd go that far, but it does seem as though those who debate these issues are trying to make the price bar into some sort of indicator rather than look at it for what it is. For some reason, they avoid taking that final step toward determining what it is that's causing the price bar to form in the first place.

In the final analysis, it really doesn't make any difference what sort of structure one applies to trade activity since what drives price is the activity itself, not what we choose to represent it.

 

[Cheese]

I have minute, tick and volume charts available to me.

Unsurprisingly it is more the time frame you use (whether 10 mins is better than 5 mins) or the tick size or volume number you use that provides the relevant framework for your methodology.

On YM I need to use min chart/s to watch an accurate picture of the gyrations developing premarket through the Open and into the initial 15/40 minutes of the market. Then I will be mostly looking at YM tick charts, YM volume charts and INDU tick charts.

 

[Cheese]

Quote from ElectricSavant:.. (range bars need to be looked at, seems interesting, very effective for S/R all on one page). Michael B.

Agree.

I didn't mention range bars in my previous post. But in trialing them to date I found that they can perform for you very well if they fit your established methodology and trading tactics as they do mine.

I can imagine they may not suit the detection and exploitation of certain specific set-ups. They may well hinder scalping; this is where a scalper needs to come in and elucidate.

As always each to his own in these things.

 

[damir00]

Quote from guy2:


It is (again this is my opinion) volume that pushes the market...

this is demonstrably not true. nothing moves the market quicker and farther than a liquidity hole, which is by definition the absence of volume.

 

[guy2]

Quote from damir00:

this is demonstrably not true. nothing moves the market quicker and farther than a liquidity hole, which is by definition the absence of volume.

You have a good point there and I think that's demonstrated in my article Anatomy of a Spike where the lack of bids in this case was overwhelmed by sell orders hitting the market. I think that's what you mean.

When a piece of good/bad news hits the market which causes offers/bids to be pulled and market orders to buy/sell to hit the market then this sort of thing will happen and I agree with your statement. However, I think that this is the exception rather than the rule and "price shocks" such as this are a relatively rare occurrance and for everyday RTH trading in something like the ES this doesn't really apply because liquidity is almost always there.