What is a Tick?

E

El Cazador

When I am viewing several tick charts (say 25 tick... 55 tick and 77 tick) what am I seeing as the little bar moves up and/or down? I know it relates to price but exactly how? On a 25 tick chart is the size of the bar the difference between the upticks and the down ticks in the last 25 trades? If one of those trades is for 50 contracts and it ticks down but the other 24 trades all tick up even though they are only for one contract each would the graphic go up? Thanks

~EC

PS. Please... don't post pictures of the little blood sucking creatures that live on deer.
 
It really depends on how your datafeed sends data for the particular symbol you are looking at. But for most symbols a tick will be a trade (meaning there can be equal ticks). For some of the pit-traded futures a tick is a price change. For electronic futures a tick is a trade. For stocks generally a tick will be a trade. So a 25 tick chart will draw the prices of the last 25 trades.

A particular trade or print may be 100 shares or 10000, but each will be just one tick. Hope that answers it.
 
Each tick is a trade regardless of size. So a 25 tick OHLC bar will show the open(first trade), high(highest trade), low(lowest trade), and close(last trade) of those 25 ticks then on to the next bar.
 
Originally posted by El Cazador
PS. Please... don't post pictures of the little blood sucking creatures that live on deer.
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Thanks for the explanation. I now wonder how tick charts can be more accurate than time charts? Seems like both can be derived from misleading data.
 
El Cazador -

Charts are charts - they're based on the underlying trade data regardless.

A time chart composes bars based on the trades that occur within each defined time period (i.e., if you're using a 1 minute chart than all the trades that occured from 10:01:00 to 10:01:59 are in the 10:01 time bar).

A tick chart is event based rather than time based and composes bars based on a specific # of trades occurring. It is inherently non-linear along the time scale.

There's a variation that I've seen called a volume tick chart that composes bars based on uniform volume traded that decomposes the trade data and constructs OHLC bars based on aggregated volumes (splitting a trade across more than one bar if necessary).

Whether looking at a 77 tick chart vs. a 1 (or 2 or 5 or...) minute chart provides more or less information is up to the trader and what works for them.
 
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