I think the answer is , you have to use volume vs tick under certain conditions, and depending on what you are actually trying to measure. I do certain studies that rely on volume charts exclusively. Keep in mind that tick charts have been around a lot longer than volume charts , so many traders are used to them and will not cut loose.
I am a price informatin only trader. Therefore, tick charts are wonderful for me. I pulled up a volume chart to match as closely as possible the tick charts that I use intraday and the signals weren't there. I'll bet that if I used volume information in my trading signals these volume charts would be wonderful though. Saying that tick charts should be abandoned may be accurate for those who do not need this type of information when trading. It is that simple.
Could you give an example of a signal that would not be 'there' in a volume chart, assuming the volume setting was comparable to the tick size.
Well if a big player is disguising his trading by putting through lots of small orders then the tick chart will make it look like lots of small players but the volume chart will expose the results of his (the) action and how effective those 100 contracts were at moving the price. So, "big money" attempted manipulation of the tick charts will have no effect on the volume charts. Big money is also implicitly hidden if picked off the the bid/ask by a seller/buyer. Example: I have 200 contracts bid at 1120.25. Along come 200 single contract sellers and sell at market. My order for 200 contracts is filled but what you see are 200 ticks flowing through the market. If you now reverse that and say those same 200 traders each with 1 contract are sitting on the ask (offer) at 1120.50 and I trade my 200 contracts in 1 trade at market the exact same exchange takes place except on the tick chart it's recorded as 1 tick instead of 200 as in the previous example. So what I'm saying is that the tick chart is showing the aggressor in the transaction and if the aggressor switches from the small players to the big players then how do you know?
I don't understand how the tick chart shows the temperature better? See the other answer I've just posted that shows that the same trasaction can look like 1 or 200 ticks depending on who the aggressor is. Volume is the key and not the number of people with an opinion. If 1000 traders each trading 1 contract think the market is going up and 2 traders each trading 1000 contracts think the market is going down and they trade at the same time then the 2 big traders are the winners. It's a bit like a stock holders meeting where they vote for the chairman/president of the company. If a million stock holders each hold 1 share in the company they can't vote in a new chairman if the person holding 51% decides otherwise. Many thanks for your opinions. Much appreciated.
I found time cycles to be much more apparent and accurate than tick or volume cycles. If you were not interested in cycles in the first place, then it doesn't matter whether how you define your x-axis (time, ticks or volume), as long as you can see the price dynamics. e.g., believing that a 133-tick chart will show a clearer picture than a 100-tick chart, is the same as believing that touching wood 3 times before each trade will make the market go your way. btw, Dick arms (creator of trin index) has created volume weighed candles. he calls his method equivolume. you can try to run a search for this on the web, maybe it will interest you. i personally don't use it, doesn't seem useful to me. Cheers 50
Just because 200 1 contract trades go through does not mean the tick chart will show 200 ticks. But if that activity moved the price would the volume charts show it the same? Michael B.
You don't - just as you didn't really know that a tick chart was "showing the aggressor in the transaction". Neither type of chart shows you any of that.
The volume chart is based only on volume - so the price "moving" wouldn't have any effect on the bars created based on volume. Totally depends on the number of contracts traded.
Perhaps I've misunderstood what a tick chart is - or rather what a tick is. It is/was my understanding that a tick is a single trade (at market I believe) irrespective of size. So if I bought 50 contracts at market that would be 1 tick and if I bought 1 contract at market that would be 1 tick. So if that is what a tick is, then 200 x 1 contract trades going through the market contributes 200 ticks to a tick chart - does it not?