Tick charts display price action based on the number of transactions rather than time. Instead of showing what happened every minute, a tick chart shows what happens every 100, 500, or 1000 trades. This transaction-based approach offers unique advantages for active day traders and scalpers.
What is a Tick Chart?
A tick chart creates a new bar after a specified number of transactions. For example, a 500-tick chart forms a new candlestick after every 500 trades. This is fundamentally different from time-based charts where bars form at fixed intervals regardless of market activity.
Key difference: On a time chart, one bar might contain 1,000 trades while another contains only 50. On a tick chart, every bar contains exactly the same number of trades, giving you a consistent view of market activity.
Tick Chart vs Time Chart
Understanding the differences helps you choose the right chart type:
Time Charts (1-minute, 5-minute)
- New bar every X minutes regardless of activity
- Slow periods produce bars with little information
- Busy periods can overwhelm single bars
- Easier to compare across different timeframes
Tick Charts (100-tick, 500-tick)
- New bar every X transactions
- More bars during high activity, fewer during quiet periods
- Each bar represents equal market activity
- Better representation of true market interest
Comparison Example
At market open (high activity):
- 1-minute chart: 1 bar with 5,000 trades crammed in
- 500-tick chart: 10 bars, each with 500 trades for detailed analysis
During lunch (low activity):
- 1-minute chart: 1 bar every minute with only 200 trades each
- 500-tick chart: 1 bar every 2-3 minutes, filtering out noise
Advantages of Tick Charts
1. Volume-Based Perspective
Each bar represents equal trading activity, making it easier to spot when the market is truly interested in a price level versus just drifting on low volume.
2. Cleaner Price Action During High Volume
During the opening rush, a 1-minute chart compresses too much information into single bars. Tick charts spread this out, showing important micro-movements you would otherwise miss.
3. Filters Low Volume Periods
During the lunch hour, tick charts naturally slow down, producing fewer bars and fewer false signals. Time charts keep creating bars even when nothing meaningful is happening.
4. Better for Scalping
Scalpers need to see rapid changes in market sentiment. Tick charts provide more granular detail during active periods when scalping opportunities are best.
5. Earlier Pattern Recognition
Because tick charts react to activity rather than time, patterns often form earlier than on time-based charts, giving you an edge in timing entries.
Choosing Your Tick Setting
The right tick setting depends on the stock's liquidity and your trading style:
Low Tick Settings (100-233 ticks)
- Very granular view of price action
- Best for scalping and very short-term trades
- More signals but also more noise
- Use for high-volume stocks like AAPL, TSLA
Medium Tick Settings (500-800 ticks)
- Good balance of detail and clarity
- Popular choice for day traders
- Cleaner patterns than lower settings
- Works well for most liquid stocks
High Tick Settings (1000-2000 ticks)
- Smoother, less noisy charts
- Better for identifying larger moves
- Fewer but higher quality signals
- Useful for slightly longer day trades
Starting point: For most day traders, a 500-tick chart is a good starting point. Adjust up or down based on the stock's typical volume and your trading timeframe.
Tick Chart Trading Strategies
Strategy 1: Tick Chart Trend Following
Use tick charts to identify and follow intraday trends:
- Setup: Series of higher highs and higher lows on tick chart
- Entry: Buy pullback to rising trendline or moving average
- Stop: Below most recent swing low
- Target: Project trend continuation or use trailing stop
Strategy 2: Tick Chart Range Break
Tick charts show consolidation ranges more clearly:
- Setup: Price consolidates in tight range on tick chart
- Entry: Break above/below range with volume confirmation
- Stop: Inside the range
- Target: Range projected from breakout point
Range Break Example
On a 500-tick chart, stock XYZ consolidates between $100 and $101 for 15 bars. On bar 16, price breaks above $101 with a strong green candle.
- Entry: $101.10 on break confirmation
- Stop: $100.40 (inside the range)
- Target: $102.00 ($1 range projected from $101 breakout)
Strategy 3: Tick Chart VWAP Strategy
VWAP works exceptionally well with tick charts because both are volume-weighted:
- Setup: Price pulls back to VWAP on tick chart
- Entry: First reversal bar off VWAP touch
- Stop: Other side of VWAP
- Target: Previous swing high/low
Strategy 4: Tick Divergence
Look for divergences between tick bars and price:
- Bullish: Price makes lower low, tick bars show less selling pressure
- Bearish: Price makes higher high, tick bars show less buying pressure
Combining Tick Charts with Time Charts
Many traders use both chart types together:
- Higher time frame: 5-minute or 15-minute chart for overall direction
- Tick chart: For precise entry and exit timing
Multiple Tick Chart Approach
- Higher tick: 1000-tick for trend direction
- Lower tick: 333-tick for entries and exits
Common Tick Chart Mistakes
- Wrong tick setting: Using settings too high or low for the stock's volume
- Ignoring context: Not using higher timeframes for direction
- Over-trading: More bars can tempt you to trade more than necessary
- Forgetting time: Losing track of when market events occur
- Platform limitations: Not all platforms support tick charts well
Platform Considerations
Not all trading platforms offer quality tick charts. Look for:
- Real-time tick data (not delayed)
- Customizable tick settings
- Ability to apply indicators to tick charts
- Clean, fast chart rendering
Analyze Your Tick Chart Trades
Pro Trader Dashboard tracks all your trades regardless of the chart type you use. Review your performance and see if tick chart entries improve your results compared to time-based entries.
Summary
Tick charts create bars based on the number of transactions rather than time, providing a volume-normalized view of price action. They excel during high-activity periods by showing more detail and filter noise during slow periods by producing fewer bars. Start with a 500-tick setting and adjust based on your trading style and the stock's liquidity. Combine tick charts with higher timeframe analysis for best results. Use strategies like trend following, range breaks, and VWAP pullbacks adapted for tick chart patterns.
Compare tick charts with other approaches in our guide on one minute scalping or learn about effective entry signals.