Tick Charts

Written by Jacey Harmon
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In the financial markets a tick is not a small parasitic arachnid that likes to drink your blood. A tick is simply a price movement in a trading instrument. There are "up ticks" and "down ticks" but no sideways ticks. When a security goes up in price it just experienced an up tick. When a security goes down in price it just experienced a down tick. In order for a tick to occur actual trade must have occurred.

Different trading instruments have different minimum ticks. Stocks do not have a minimum tick. But stocks do have the "up tick rule" that states a stock must have an up tick before it can be sold short. Option contracts do have minimum ticks. For contracts that trade below $300, the minimum tick is $5. Contracts that trade over $300 have minimum ticks of $10. Each of the various futures contracts carries minimum tick requirements.

Charting Intraday Price Action

Traders use tick charts to plot the intraday action of a specific trading instrument. A tick chart will show the day's activity trade by trade. Tick charts are one of the most important tools for real-time traders. They provide the trader with the most precise picture of a stock or contract's intraday activity.

Tick charts can be manipulated similar to daily or weekly charts. They can be changed to bar, line, or candlestick format. A tick chart can be formatted to only show trades for the day or for a longer time frame. Some charting services allow users to create tick charts that show data by the second instead of minute. You can even customize a tick chart so that each bar represents a specific number of ticks. Tick charts are only useful for day traders and swing traders, normal investors will not need to use tick charts.


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