Tag Archives: Chart Type

Tick or Range Charts vs Time Based Charts – Example 2

While my analysis is usually conducted on time based charts, last week’s article discussed the one period of time when I always refer to tick or range based charts (usually monitoring both). If you missed it, you can read it here: http://yourtradingcoach.com/trading-process-and-strategy/tick-or-range-charts-vs-time-based-charts/

I’ve had a couple of requests for another example, with one request also for showing entry/exit points, so here’s one from this week’s market action. This time we’ll look at a with-trend example.

At 12:00pm (midday) GMT on Thursday, 4 Feb 10, we had the release of the MPC Rate Statement and Official Bank Rate. The following example trades the action following this news release. The news release is obvious on the first three charts due to the rapid expansion in volatility. It’s not so obvious on the range chart, so has been marked by a blue vertical line.

Trade entry (2 parts) is shown in blue. Exit (scaled out) is shown in magenta.

A little disclaimer first – trade execution was done through Interactive Brokers, not through Ninja, so the trade execution plots had to be created through a post-session replay. Part 1 is exactly as traded live, entry 1.5840, exit 1.5848. Part 2 orders were entered targeting 1.5860, but as sometimes occurs in one-click-trading the order was somehow inadvertently cancelled immediately after it was placed (I assume I must have somehow clicked on it a second time to cancel). By the time the initial confusion was over, confirming that the order was actually cancelled and I only had a one-part position in place, there was no opportunity to re-enter Part 2. Stuff happens! In the example though, I’ve chosen to show Part 2 anyway – makes me feel a little better and you get to see my original intent.

First, the five minute chart… not much use in getting a fast response following a news release:

 

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Tick or Range Charts vs Time Based Charts

My preference is to trade using time based charts – 30-minute, 5-minute and 1-minute. Largely it’s just due to personal preference. I gain a greater feel for price action through the time based charts, in particular noting the changes of speed through greater movement in a unit of time. Plus there’s also the fact that I believe more people are watching the time charts than tick charts, so I want to see what they’re seeing (if you have data to prove otherwise, please let me know).

However there are some times when I find it greatly beneficial to see a differing view of price action.

Sometimes when I’m just not feeling the bias well I’ll change the view to gain a different perspective. Remember, it is the same underlying price action; you’re just viewing it differently.

The main time though is when price experiences a sudden explosion in volume and volatility, such as occurs following news events or economic releases. In this case I’ll still monitor the time based charts, but they’ll take a second place to either tick charts and/or range charts, which tend to give me greater insight into the forces within the larger-range time-based charts.

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