In the world of financial markets, speed is often the key to success. Traders are always looking for ways to get ahead of price movements and act faster than the rest of the market. One popular method used by experienced traders is tick trading — a fast and highly responsive technique that relies on tick charts instead of traditional time-based charts.
This blog will help you understand what tick trading is, how it works, and why it can be a powerful strategy for short-term traders.
What Is Tick Trading?
Tick trading is a strategy where traders analyze tick charts — charts that update based on the number of trades (or "ticks") instead of time. For example, a 100-tick chart creates a new candlestick or bar every time 100 individual trades have occurred, regardless of how much time has passed.
This is different from a regular chart, where a new bar might appear every 1 minute, 5 minutes, or 1 hour, depending on the chosen time frame. Tick charts are based on trading activity, making them very useful for fast-moving markets.
How Tick Charts Work
Tick charts are more dynamic than time charts. If the market is very active and many trades are happening quickly, a new bar may appear every few seconds. If the market is slow, it may take a minute or more for the next bar to form.
This gives traders a real-time view of market activity, helping them identify entry and exit points with greater accuracy. Tick charts allow you to see how the market behaves based on trade volume, not just the clock.
Advantages of Tick Trading
Speed and Precision
Tick trading allows you to spot market changes faster. Since charts update with every set number of trades, traders can react more quickly to price movements.
Cleaner Market View
During low-volume periods, time-based charts can show a lot of noise and misleading patterns. Tick charts filter out this noise and only show bars when there is actual trading activity.
Ideal for Scalping
Scalpers — traders who make multiple quick trades in a day — love tick charts. These charts reveal tiny price movements that may not show up on regular charts.
Flexible Charting
You can choose different tick settings depending on your trading style. For example, 50-tick or 100-tick charts are great for fast trades, while 500-tick or 1000-tick charts help show short-term trends.
Common Tick Trading Strategies
Here are a few strategies that work well with tick trading:
● Scalping
This involves taking quick trades for small profits. Traders use low tick settings to jump in and out of the market within seconds or minutes.
● Breakout Trading
Traders use tick charts to spot when the price breaks through support or resistance levels. Breakouts often happen with increased volume, which is clearly shown in tick charts.
● Trend Following
Larger tick charts help identify mini-trends. Traders follow the trend using indicators like moving averages or MACD.
What You Need for Tick Trading
To get started with tick trading, you’ll need:
A trading platform that supports tick charts (like MetaTrader, NinjaTrader, or Thinkorswim)
A fast and reliable internet connection
A broker with tight spreads and quick trade execution
Basic knowledge of technical indicators
Risks of Tick Trading
While tick trading can be profitable, it also comes with challenges:
Overtrading: Because tick charts update frequently, traders may take too many trades.
Slippage: In fast markets, the price may change before your order is filled.
Mental Stress: Tick trading requires intense focus and fast decision-making.
Risk management is essential. Always use stop-loss orders and never risk more than you can afford to lose.
