Day Trading - Time Based Charts VS Price Driven Charts

Discussion in 'Technical Analysis' started by Laissez Faire, Oct 16, 2012.

  1. Discuss.

  2. For most of my studies of price action, I`ve been using time-based charts, primarily the 5-minute and 1-minute for the ES contract, which is the contract I`ve been paying most attention to. I love it.

    However, many traders I talked to insisted that price-driven charts were superior for day trading and that I should do some research on them.

    So, for the crude oil market, I undertook an extensive study of tick charts, range charts, volume charts and renko bars, trying a multitude of different settings for each chart. Personally, I was disappointed. I could not find any edge over minute based charts.

    At times of heightened volatility when bars become large, a tick chart will let you see inside the bars and possibly offer clues about an early reversal, but honestly, I don`t find that it offers that much of an edge to me. I would not use a 5-minute chart to day trade crude oil, but I think a 1-minute chart or even a 30-second chart gives me all the information I need.

    Some will argue that price driven charts smooths out price action, but so what? What do I care if price is smooth or not? I don`t draw trend lines anway.

    I have been using a tick chart to AID in execution, but I rely on the 1-minute chart.

    I will now do a similar extensive study with ES keeping an open mind, but I`m not super optimistic. I also have been using a tick chart for ES as well, but I rely on the 1-minute and 5-minute.

    Anyone else?


  3. Schaefer


    Same experience here, as well. I mainly trade NQ, and I've been through range, tick, volume, renko, etc. But I always keep coming back to time based charts.

    It's true, that some of them really smooth out the price action, and give you more detail, but it is counter intuitive to my style of trading, so I stopped using them.

    So I guess, it all comes down to what works for you. And the only way to find out is to try them all out, and decide for yourself.

    Good luck,
    VPhantom likes this.
  4. Great minds think alike, Schaefer? :)

    On certain days, I actually think the price-driven charts hide more information from me than I can infer from a time based chart.

    I like the consistency of the time based chart. Each day it is the same number of bars. No surprises there. I like having time on the X-axis and observe price travel across the two axes in a consistent manner.

    I enjoy watching price oscillate from level to level. The 1-minute chart really gives me all I need.

    That said, I will start my study on ES now, so I`ll keep an open mind and report back if I find anything.
  5. I could mention that I have pretty much stopped using the 5-minute chart on the ES now. It`s not transparent enough.

    Back to my study room...
  6. I could see myself replacing the 5-minute chart with a slower volume chart, but I`m not convinced.

    Possibly using a 233 or 512 tick chart to aid execution.

    Not convinced of that either, but will continue my studies.

    No interest of discussing this, traders?
  7. Schaefer


    Be careful with the volume charts. If you choose too small of a volume for the bar, and a large order comes in, you'll get the repetition of the same candles. It may, or may not bother you, but it sure does annoy me, so I stopped using them.

    The problem with the tick chart is, when the action gets busy, it will print more candles than necessary to show you the same amount of information. Which may, or may not be a bad thing, depending on your trading style.

    The range/renko charts share the same problem as the volume charts, in that if you specify too small of a range, and when price goes up/down quite a bit, it will print bars at light speed. It looks good in hind sight (mental masturbation) analysis, but almost impossible to capture in real time, at least for me.

    I used to be obsessive with smaller time frames to fine tune entries, but it didn't work out too well for my trading style, so I stopped using them.

    Good luck,
    VPhantom likes this.
  8. speres


    it isnt a case of time v price, u need to put them together
  9. My sentiments exactly, Schaefer.

    Many of the arguments for price-driven charts is for me instead an argument against using them.

    I can see the value of using a tick chart at a proper setting to help execution, but watching a live minute chart really gives you much of the same information, so it may be redundant.

    Time frame and trading style is obviously important and since neither you and I are scalpers, if I understand you correctly, that may be a contributing factor to why we did not find too much value in them.

    The 1-minute chart is honest and most importantly, CONSISTENT day to day.

    Good trading, Schaefer.

    VPhantom likes this.
  10. You need to bring more to the table than that, speres. :)
    #10     Oct 18, 2012