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How do I access the Tick Chart?
The Tick Chart for indices is available to all users: Basic, Silver,
and Gold. The Tick Chart for stocks is only available to Gold members.
To access the Tick Chart, start by typing a stock symbol, such as "CSCO,"
into the stock symbol entry box at the upper left corner of Tradetrek's
home page, then hit the "GO" button. You now arrive at the "Quote"
page, which includes our
Ticker-Based tool bar (please see Figure 1). Next, click
on the "Tick Chart" button. You have just activated the Tick
Chart!
Figure 1.Ticker-Based tool bar
Once you activate a Tick Chart, you can click on the "Large Chart"
link at the bottom of the chart window to enlarge the Tick Chart. In turn,
once in "Large Chart" mode, simply click on the "Small
Chart" link to change back to the smaller sized Tick Chart.
Figure 2 shows an example of the Tick Chart for CSCO (Cisco Systems).
Try an index too. Type in $INDU in the symbol box and click on the Tick
Chart button to see the Dow Jones Industrial Index's heartbeat.
Figure 2. Tick "Stock Heartbeat" Chart for CSCO
How do I understand and interpret the Tick Chart?
The Tick Chart is a real-time, dynamic visual presentation of the trading
activities of a stock. In each one-second interval, if there is a trade,
it plots the price of the trade together with a volume bar; if there is
no trade, the previous trade price is plotted without a volume bar. Please
refer to the chart in Figure 1 while reviewing the remainder of this section.
Such a chart resembles the Electrocardiogram (EKG), or recording of the
heartbeat, therefore, we may call it the "Stock Heartbeat Chart"
or the "Stock EKG Chart." Really though, it is a graphic representation
of the tick movements of the stock, so it is called Tick Chart on the
Tradetrek website. At the top left of the chart, you can see the stock
symbol and, in parenthesis, the price of the last trade. The height of
the volume bars indicates the sizes of trades. The bars are plotted in
a green color if the trade price is equal to or higher than the previous
trade price, and the bar is red if the trade price is lower than the previous
trade price.
How will the Tick Chart help me trade stocks?
Usually you cannot get trade ideas by simply looking at the Tick Chart.
You may decide to buy a stock because you like the company fundamentals
or because the stock shows a bullish technical pattern, or for any other
reason. Once you have decided to buy or sell a stock, the Tick Chart
can give you help when you execute the trade. The Tick Chart can do
the following:
(1) Make it easy for you to see the price movements in the past few
minutes. Before you buy a stock, look at the chart and make sure that
it is not in a quickly dropping trend. Before you sell or short a stock,
look at the chart to make sure that it is not in a quickly rising trend.
(2) The Tick Chart shows the liquidity situation clearly. Looking at
the chart, you can easily see how actively the stock is being traded
and what typical trade sizes (volumes) are. For example, if you hold
2,000 shares of AAPL and want to sell them all, you look at the Tick
Chart for AAPL and find out that in the past two minutes, AAPL is rather
thinly traded: the typical trade size is 200 shares and only 15 trades
took place in the past 2 minutes. Then you know that the best way to
sell your 2,000 shares of AAPL is to break it up into a few trades selling
200 shares at a time, or you may conclude that it is not a good moment
to sell your 2,000 shares of AAPL and you should wait until there is
more trading activity in the market.
(3) The Tick Chart helps day traders better capture the momentum of
a stock. Day traders who trade on momentums of stocks usually look at
level-II quotes to see the
broker queues and the depth of the limit
orders, while at the same time they try to chase the momentum of the
price movements. He buys a stock if he sees the stock price is quickly
moving up (he is following the momentum of the up-trend) and if more
buying orders are entering the queue. To do this, in general the day
trader has to memorize how fast and in what manner the price has moved
up. The Tick Chart eliminates this repetitive, demanding process. Looking
at the Tick Chart, he can vividly see the recent price movements and
focus on making trading decisions rather than memorizing the price movements.
With this knowledge we hope that you can better utilize the Tick Chart to
maximize your profits.
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