Most traders analyse markets using standard time-based charts. These charts display market activity over fixed periods such as 1 minute, 5 minutes or 1 hour.
While time charts are widely used, they do not always show how quickly trading activity is actually occurring within the market. This is where tick charts provide a different perspective.
Rather than creating a new chart bar after a fixed amount of time, tick charts create a new bar after a certain number of transactions have taken place. This allows traders to see changes in market activity and momentum more directly, particularly during fast-moving conditions.
Today, we will explain the difference between tick charts and time charts, how tick charts work and why some traders use them during periods of high volatility and major news events.
What are Time Charts?
Time charts are the standard charts most traders use. On a time chart, a new chart bar forms after a fixed amount of time passes.
For example:
- A 5-minute chart creates a new bar every five minutes
- A 1-hour chart creates a new bar every hour
This happens regardless of how active or inactive the market is during that period. Time charts provide a clear and structured way to analyse price movement and are commonly used across Forex, indices, commodities, and stocks.
What are Tick Charts?
Tick charts work differently. Instead of forming a new bar based on time, a new bar forms after a specific number of trades or transactions occur. For example, a 100-tick chart creates a new bar every 100 transactions.
If the market is highly active, new bars may form very quickly. If market activity slows down, bars may take longer to appear. This means tick charts respond more directly to changes in market activity rather than simply measuring the passing of time.
Why Tick Charts Show Market Speed
One reason some traders use tick charts is that they can highlight the speed and intensity of market activity more clearly during volatile conditions.
For example, during major economic news releases:
- Trading activity may increase sharply
- Transactions may occur much faster
- Price movement may become more aggressive
On a tick chart, this increased activity becomes visible through bars forming more rapidly.
By comparison, a time chart still produces bars at fixed intervals even if market activity changes significantly during that period. This is why some traders feel tick charts provide a more detailed view of momentum during fast-moving conditions.
Tick Charts During News Events
Major news events can create sudden increases in volatility across financial markets. For example:
- Interest rate announcements
- Inflation reports
- Employment data releases
These can all cause rapid changes in buying and selling activity. During these periods, tick charts may help traders see the following more clearly than standard time charts:
- Changes in momentum
- Increased market participation
- Sudden bursts of volatility
However, this also means tick charts can appear much faster and more aggressive during volatile conditions.
Advantage of Tick Charts
Some traders prefer tick charts because they can:
- Provide more detail during active market conditions
- Reduce periods of low activity during quiet markets
- Highlight momentum changes more clearly
Tick charts may also help some traders identify short-term price behaviour more precisely during fast market conditions.
Advantages of Time Charts
Despite the benefits of tick charts, time charts remain the most widely used form of chart analysis. Time charts are often considered to be easier to follow, more structured, and better suited for broader trend analysis.
Many traders prefer time charts because they create consistency across different trading sessions and market conditions. Longer-term traders may also find time charts more practical for analysing overall market structure.
Which is Better?
Neither chart type is automatically better than the other. The choice depends on trading style, market conditions, preferred timeframe, and level of trading activity.
Some traders use time charts for overall market direction while using tick charts for more detailed short-term analysis. Others prefer to focus entirely on one chart type.
Conclusion
Tick charts and time charts both provide different ways of analysing market behaviour. While time charts focus on fixed time periods, tick charts focus on trading activity itself, which can help traders see changes in momentum and volatility more directly during fast-moving conditions.
At Samuel and Co Trading, understanding how different chart types affect market analysis forms part of helping traders develop a broader understanding of price movement and market behaviour.
In trading, the way market information is displayed can sometimes influence how traders interpret momentum, volatility and overall market conditions.
