Tick trading is the practice of using tick charts for devising and executing day trades. Tick refers to the minimum change in price of a cryptocurrency that happens. It can be an upward rise or a bottom down drop in the price. Although the term was coined for stocks initially, but now crypto markets also use this as a routine. However, another perspective to tick, is that tick is also the minimum allowed fraction, by which the price of a cryptocurrency is allowed to fluctuate and in-turn allowed to be traded.
How this works
Upticks refers to the situation when the price of the cryptocurrency rises from the last trade. Downtick is the opposite situation when the price falls as compared to the last tick. Tick charts are usually the graphs that help in tick trading and depict a number of parameters like the upticks, downticks, tick index, bars etc. Here, every tick corresponds to a single trade. And after a fixed number of ticks, a new bar is shown in the graph, usually every 1000 ticks. So tick charts vary over exchanges, for cryptocurrency, and also vary depending upon the service provider. But, they still help you differentiate between professional and beginner activity on the chart, for trading your cryptocurrency, if you know how to read the tick chart. Another advantage is that the tick chart will compress the low activity periods and show you a cyclical trend in the crypto trading, which is quite important from an investor’s point of view.
Tick of the market is another thing that you must consider while deciding to make a tick trade. Tick of the market, refers to the total number of cryptos’ that traded for more than the last trade after removing the cryptos’ that traded down from the last trade. So overall, if the tick of the market is some positive value, it indicates a good time to indulge in the cryptocurrency trading and otherwise the scenario might not be that favorable.
The 4 Main Considerations
While using a tick trading mechanism, investors usually look for 4 things in the chart.
Open : Where a new bar begins.
Close: Where a bar ends.
Low: What is the lowest point in a bar?
High: What is the highest point in a bar?
The Crypto Tick Traders
Almost all the amateurs in the crypto trading, have some or the other mechanism in place for tick trading. This is because, the tick charts give them very useful insights as to when to make a trade transaction. It is different from the trading signals, in the sense that the signals are based on analysis and rules, while the ticks are based on just pure price and transaction data on a particular exchange. So both the complement each other. This is also the reason why many crypto traders, try to take help of consulting firms that provide all these data in an integrated form in a single platform. Say for example, executium.com is one such podium, that will multitask when it comes to providing analysis and data for cryptocurrency trading. Executium.com enables the traders to decide when was the market most active, when was it most idle, and what was the market volatility at a given point of time.