Many traders use time-based charts for their technical analysis but there is another way to display charts the (x) tick view

What is a (x) tick view ?

A tick represents a transaction between a buyer and a seller at a given price and volume.
In the (x) tick view each candlestick shows the price variation of x consecutive ticks.
In the example below, we are using a 3000-tick view. Consequently, each candlestick shows the price variation of 3000 consecutive ticks.

What advantages do I get by using the (x) tick view ?

Let's see an example.
These two charts show the E-mini Nasdaq during the same time period, but the (x) tick chart gives you five more possibilities to sharpen your analysis!

In few words, if you use the (x) tick view in combination with the classic intraday time-based view, you can enrich your chart analysis with not only different, but also more accurate information:

1. Clearer analysis
2. Not time-based
3. Confirmation of trendline breaks
4. Clearer signs when to exit the market
5. Correlation between the volume and the price development

1. Clearer analysis

Let's zoom to the time period of April 23rd and April 27th and take a closer look at the candles.

If the market is active, the classical view might sometimes not be 'fast' enough. Sharp drops and increases of the price will be displayed as one large candle, even if you choose a rather small view like 1 minute. You find an example for this case in the image above.

You can see that in the 2-hour chart several small candles (common during the night) and several long candles (common during the day) are displayed. A trendline can be drawn between the 23th and the 25th, but will not indicate the trend change that takes place on the 25th and the 27th. You would actually need to draw two lines, which makes it even more difficult to decide where the trend might go.

In the (x) tick view, the long candles are divided into smaller 2000-tick bars. A strong resistance line can be drawn from the 23rd until the 27th, which allows you to better anticipate the trend course during these days.

2. Not time-based

We will keep the same time period, but discuss another aspect of the candles in a (x) tick view.

In times with only little buying and selling activity, like before the close of the market or around noon, the classic 2-hour view will show several unimportant candles that will give you no major information as you can see in the bottom chart of the example above.

On the other hand, the 2000-tick view displays only one or two candles during calm periods and avoids therefore an accumulation of small candles. This makes the detection of trends much easier, since a zero-trend environment in the time-based view can change your support and resistance lines drastically and consequently your trading decisions.
In the image below we coloured the odd days yellow and the even days white.

In the time-based view, each day has the same width.

That is not the case in the (x) tick view, which shows more candles during days of high activity and less during days when the market is calm. For instance, on the 27th the (x) tick view displays 32 candles while the day before it only displayed 16 candles.

3. Confirmation of trendline breaks

As mentioned before, support and resistance lines can be very different in the two views. But what does that mean exactly?

See the E-mini Nasdaq 100 between April 23rd and May 10th. It is obviously a bearish market.
Let's imagine that we are trying to enter the market on May 4th if a bullish signal was confirmed.

The image above shows a 2-hour chart and a 3000-tick chart, which display roughly the same amount of candles. If we draw the main resistance trendline in both charts, we see that there is a significant break of the trendline on May 5th in the 2-hour chart. Many market participants might go long, assuming that this is the start of a new bullish trend.

In the (x) tick view, the trendline holds. If you had both charts, you would have most likely waited until you would have been able to detect a clear trend underneath or above the resistance trendline.

Your decision would have been different depending on the view you worked with.

4. Clearer signs when to exit the market

Imagine you are trading the Euro Bund Future in real time, with the information we have on the 25th at 10:00 am on the chart below.

We assume that the trend will be bearish, so we sell at 10:16 am at the price of 115.55.
The 1-hour chart makes it impossible to identify where the trend will go or if it might change. The only thing we know, is that it was the right decision to sell.
So let's take a closer look at the chart by choosing a 1-minute view and 100-tick view as shown in the picture below.

At around 10:00 am the Euro Bund Future drops. This drop, displayed as one long candle in the 1-minute chart, is divided in several smaller candles in the (x) tick view: this allows you to draw a different support line compared to the one you get from the 1-minute view.

The 1-minute chart displays again one long candle at 10.15 am and breaks the support line. We sell and the market goes in the right direction for us.

A few minutes later, a trader that works with the 1-minute view only, is faced with two options: hoping that the price will fall further, without having any indication when and if the trend turns, or to exit the market and wait for better times.

Unfortunately for this trader, both choices are only based on emotions. Imagine how frustrating it would be, if you had exit the market because you wanted to break even with your losses of the previous days, but the market actually falls much further. On the other hand, imagine how frustrating it would be, if you had kept the selling position, the trend changes and you lose the money you just earned.

As you can see, the chances of feeling frustrated at the end of the day are rather high!

Meanwhile, the fortunate trader that works with both views, can apply the results of his technical analysis to make his choice. For instance at 10:25 am he may decide to buy half of his selling position, because the price just touched the main support trendline. He would exit the market at right time and increase his profit.

5. Correlation between the volume and the price development

Another major advantage of the (x) tick view is the usage of the volume.

In the classic time-based view, the volume shows only the number of securities exchanged during a given period.
It will give you no indication if the security was bought or sold by major players or private investors.

However, in the (x) tick view, each volume bar represents the average volume of all transactions of the corresponding candlestick. Let's see what that means in an example:
If you choose a 5-tick view, you could do the following calculation to find out about the value of the volume bar:

The volume bar of the corresponding candlestick would represent in this case the following value:
1210 + 840 + 310 + 243 + 670 = 3273

If you add the moving average to the volume chart (as the blue line in the example above) and the volume bar is taller than the indicator, you can assume that the transaction was generated by a bigger investor. These major players are generally more knowledgeable and critical about their investments than individual investors --and their entry at a particular price tends to set the direction of the future trend.

Experience shows that a new high, like at point 2 in the example above, accompanied by smaller volume bars than those of the previous high, like at point 1, indicates that the bullish trend may come to an end.

At point 3 of this chart, the major investors are equally selling and buying. This causes a stagnation on the the short term support level and once the market decides to break the support, only individual investors are active and set the price.

Conclusion:

In the past paragraphs we presented you the advantages of the (x) tick view by comparing it to the classical time-based view.

The (x) tick view shows many times a different chart than the time-based view during the same time period. This can help you when determining wether to go long, short, stay out of the market or even more important, exit your positions. In many cases the chart is clearer and helps you to apply technical analysis tools.

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