Day Trader Guide: Working with a Tick Chart

in Day-trading

A tick chart works as a graphic representation of a stock’s activity in day trading. Since this tick chart looks like a heartbeat recording, it's also regularly called by some day traders a Stock EKG or Stock Electrocardiogram. To view sample shots of this chart, look into a day trading blog. During a trade, a volume bar shows up on the chart together with the cost of the trade.

A tick chart has several useful functions to a day trader but the thing it does not include is making a choice for him. He needs to be able to read the chart and then make it work to his advantage.

One of the things the chart is capable of doing is make it less difficult for a day trader to view the price changes in the past few minutes. This is really important whenever a day trader decides to buy since before making a purchase, he has too see first if it's not a swiftly dropping trend and just before selling, he has to make sure it is not a rapidly rising trend. A day trader will also know the liquidity of a specific security via a tick chart. Determining the volume and how actively fellow traders are trading the stocks are made less difficult by using a tick chart. This function helps a day trader in determining the perfect time to buy or sell a stock.

A tick chart is also useful to a day trader in figuring out the pace at which a stock’s value is shifting. This is therefore especially useful in momentum day trading. What momentum day traders like are stocks that move strongly in one direction. Exactly what a momentum day trader does is hop on the bandwagon to be able to gain profit. In order to ensure success at momentum day trading, a day trader should commit to memory the pattern and the velocity at which the stocks price is growing. The tick chart will eliminate the day trader’s need to memorize and definitely will clearly show the most up-to-date price changes permitting him to exert all energy at developing the best possible trading selections.

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John Smith has 18 articles online

Since tick charts displays the number of trades that takes place, it is vital to understand its functions.

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Day Trader Guide: Working with a Tick Chart

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Day Trader Guide: Working with a Tick Chart

This article was published on 2012/04/08