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Day Trading Charts and Indicators

Day Trading Tick Charts and Indicators

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Today’s quick lesson is about day trading charts and indicators.

*And in this post you will learn that I only use three indicators and what these indicators are. If you have been following me for a while then you know I like to simplify my approach to day trading and this includes technical analysis and indicators that I use. 

But you can only simplify your approach after you have learn and master the fundamentals of day trading and how markets move. And with this foundational base you can become a profitable and consistent trader with your own trading style.  

This is what my typical chart looks like. I usually use two to three different charts. They both they all look the same is just a different time frame. But I personally don’t use time frames. I use ticks.

Trading Tick Charts: Bars vs Ticks

As you can see here, it says 610 Tick. I call this my 610 Tick chart. And basically all it is, is if you look right here on a bar; inside this one bar there were 610 transactions done for the ES mini.

This is the ES Mini. I follow the S&P 500 index futures. And that’s what it’s called the ES mini. So basically all it is, each bar is 610 ticks. I also use a larger time frame, but again, it’s still in ticks.

It’s the 1095 Tick chart, which is two and a half times more of this. Basically it just gives me a little bit more of a macro view. So this is what my chart looks like. Each box is a point which is $50 in the futures market. And it is split into four ticks, which is different from these ticks. 

I know in the futures market it’s a little bit crazy. You have the ticks that are four ticks in a point which equals $50. And then you have the tick bars, which are transactions per bar. 

They’re called the exact same word. But they have totally different meanings.

*To make this point more clear (I know it can get confusing with the term Tick and trading tick charts); a tick represents a single trade or price change of a stock. And a tick bar is how I like to chart my trades with each tick representing a number of trades rather than a time period. Refer back to the 610 Tick chart I talked about where each bar represents 610 transactions rather than a period of time i.e hour, minute, day.

So this right here is one point and it’s split into four ticks. This is how I would be calculating my entries, exits and how much money I have made or lost during the day.

So that’s why I have this grid split up into a point grid. It’s just easier for me to see because I am a scalper. I only go for smaller profits, which is about one point.

trading tick charts
I prefer to keep my approach to trading simple and really only use 3 indicators that are discussed in detail below in this post.

Trading Tick Chart Indicators

So here are my favorite indicators. I personally only use three indicators in total.

*At the bottom of this post you can read more in detail about the three indicators I like to use and what they represent and how they are used by traders when assessing trade setups.

I use the EMA lines. I have both of the lines for both charts and also the MACD indicator. This is the movement when you look at this line right here at the zero line. Anything that is above it shows strength.

Recommended Read: How To Use The MACD Indicator

If it is a buyer’s market. If the market is going higher. And if you look below it, it shows the strength if it is going to the downside, if it is going short – a sellers market.

All that it shows me is the strength of entry, for instance, right here. This is a pretty strong entry move going up, so this shows me that it’s a strong buyer’s market. 

The third indicator itself is the actual tick bars because the majority of the people will use time charts either 1 minute, five minute, daily, weekly. So using a tick counter is actually considered more of an indicator rather than the time frame of the market

Recommended Read: Best indicator for futures trading

Trading Tick Bars on Financial Charts

So those are my three main indicators that I work with. They show the strength. And then also you can start to read the tick bars as well. For an indication of where it’s going to be going. If it’s closing strong at the end of each one, that means that’s the strength that it’s giving at that moment.

And you need to see how it’s going to continue. 

When it’s closing like this in the middle. That’s kind of an indecision moment like right here. You’re not sure where it’s going to go, so it’s better to sit it out and then it actually goes down afterwards.

Recommended Read: What is a Consolidation Area?

So you don’t need a lot of indicators, you can make it as simple as possible to understand. Where the market is going, you don’t need flashing lights. You don’t need a lot of other things. The easier the better.

Day Trading tick Charts

*More Details on the 3 Indicators I Use

So after listening to (and watching the video above) I think you understand that my approach to trading is simple when it comes to indicators and technical analysis and also you don’t really need a lot of indicators to be a profitable trader.

But I think a little bit more of an explanation of the three indicators I use will help you with understanding how I trade and also how you can use these indicators (and also choose ones you prefer to use) to set up trades.

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1. EMA

The EMA stands for Exponential Moving Average. And in the chart above you can see 3 EMA lines that represent 20, 52 and 135 periods.

So what does this mean?

First off the EMA measures the trend of price movement of a period of time. 

So for the line that represents the 20 EMA this shows the average price of the last 20 periods. The periods could be days, hours, minutes or any period that you select as your EMA. 

So the 52 EMA is the average price of the last 52 time periods (again it could be minutes, hours, days etc) and the 135 EMA shows the average price for the last 135 time periods.

So when price is above the EMA line this could indicate an uptrend and likewise if price is below the EMA line it could indicate movement to the downside.

You may have heard of EMA crossovers. This is used by traders to identify when there could be a change in the direction of price movement. 

Usually when the shorter-time period EMA crosses over a longer-time period EMA this is considered bullish because it signals that the more recent price action is gaining momentum to the upside. In an example it could be when the 20 EMA crosses over and above the 52 EMA.

And a bearish crossover is the opposite with the longer-time period EMA line crossing below the shorter-time period EMA. As an example this is when the 52 EMA crosses below the 135 EMA line.

The MACD is a popular trading chart indicator used to identify trends (in either direction) and changes in the direction of price action.

2. MACD

This is a very popular indicator among traders and it stands for Moving Average Convergence Divergence. The MACD is used to identify trends (in either direction) and changes in the direction of price action.

Basically the MACD shows the strength in the market. The best signals are when the MACDs and price movement are in harmony i.e showing the same direction or trend.

In this case this would be when price is going up and the MACD is also showing strength.

The zero line is very important in reading the MACD. When the MACD is above the zero line and moving strongly above the zero line this indicates strength in the market.

Conversely when the MACD moves below the zero line this would signal less strength in the market and potentially lower prices.

3. Tick Bars

Tick bars are a type of trading indicator that measures price movement based on the number of trades (ticks) rather than time intervals. Unlike traditional time-based charts, such as 1-minute or 5-minute charts, tick bars focus on capturing market activity regardless of the time it takes.

As I showed earlier I use a 610 Tick chart so each of the bars show 610 transactions regardless of the time it took for those transactions to be completed.

And also as I said earlier the Tick counter is considered an indicator as opposed to showing the time frame of the market.

If you have any questions you can always ask them in my Facebook Group and if you want to learn day trading basics – check out Day Trading Courses.

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