The scalping technique is a trader’s favorite strategy that derives small profits from tiny price differentials over a brief period of time. This technique calls for a specific level of speed in decision making, order execution, and a functioning trading system. One of the most used trading platforms is MetaTrader 5 (MT5) which offers solutions that can help scalpers MT5. Tick chart which shows all changes to the price of a trading instrument is extremely useful for scalpers.
Here, we cover the tick charts concept within MT5, their use in scalping, and particularly their advantages for prop traders. We analyze tick charts and highlight their usefulness, while arguing how they can improve a scalper’s decision-making and elevate a scalper’s strategic approach.
The tick charts in MT5
It is imperative to first define a “tick” in order to understand deferential tick charts. In simplest words, a “tick” in a particular market would mean a minimal price shift. For instance, in forex, a tick could be a 1 pip movement. In some other markets, it can be a fraction of a pip, a whole pip or more than that depending on what instrument is being traded.
We have seen powerful platforms like MT5 that allow traders a good amount of freedom to customize their charting tools. MT5, for example, comes with time based charts such as the 1-minute, 5-minute and even a one hour chart. Tick charts are not bound by time intervals and instead use price fluctuations as their basis. Each candle on a tick chart will form a certain number of ticks irrespective of the time it takes. For example, if you select a 100 tick chart, a new bar will appear every 100 price movements irrespective of the time spent.
Why Scalpers Prefer Tick Charts in MT5
Scalpers and tick-based charts work hand in glove. In scalping tick charts provide another important advantage to scalpers : they make available the real-time data less delayed than time based charts. Having the trade executed as fast as possible enables scalpers to take advantage of windows of opportunity they would miss on the standard time-based charts.
Tick charts also provide an accurate replication of the trading activity occurring within the set time frame. On time-based charts, pricing may experience a pause for a lengthy period of time which might be marked by low volatility. Tick charts capture real-time action and price changes thus always tracking movement. Scalpers appreciate immediacy and thus gain a view of vital market information to decide as to whether they should place trades or not.
Tick charts benefit traders requiring exactness. Tight entry and exit gates require precise movements in trading levels. Tick charts show the required level of detail required to note price shifts that are just beyond the borders of opening and closing of trades.
How to Set Up Tick Charts in MT5
While tick charts can prove useful for scalping, their setup in MT5 requires only a few simple steps. Follow these instructions to set up your tick chart.
- Open MT5: Ensure that the MetaTrader 5 platform is opened and that the chart for the desired asset is already opened.
- Add Tick Chart: By right clicking the chart window, you are able to select “Timeframes”. While MT5 does not have built-in tick chart functionality, one can customize indicators or download tick chart plugins from the market or other sites, so that they can be integrated into MT5.
- Customize Settings: After enabling the tick chart, you can set a user defined value for the number of ticks per bar. It is common to set between 100-1000 ticks for most assets.
- Adjust Indicators: In addition to the tick chart, applied custom indicators such as Moving Averages, Bollinger Bands, or even RSI (Relative Strength Index) may be useful in determining trends, support and resistance levels, as well as identifying overbought and oversold market conditions.
- Start Trading: Now that your tick chart is configured, you can keep a close watch on price action. However, do keep track of tick count as decisions should be made very quickly based on current market data.
Advantages of Scalping With Tick Charts
There are several advantages that tick charts offer with scalping and they include their ability to:
- React to Quicker Market Changes: Tick charts, as discussed above, offer more frequent price updates than time-based charts. This allows scalpers to make faster decisions to execute trades and thus gain from the movements during the extremely limited period of time available.
- Reduce Market “Noise”: On time-based charts during low-volatility periods, “noise” can be quite prominent. Tick charts, on the other hand, focus solely on price changes without any market noise. This is especially helpful for traders that try to trade off minor price changes.
- Recognize Price Movements Efficiently: Scalpers require immediate recognition of marked patterns, trends, and signals on the charts. Tick charts allow for greater detail, which assists in recognizing setups like breakouts, reversals, and consolidation patterns so a swift decision can be made.
- Minimize Time Waiting: For a time-based chart, a trader might need to wait for the next candlestick but with tick charts, new bars are created after a certain number of ticks which drastically reduces wait time and allows traders to act immediately.
How Prop Firms Can Benefit from Tick Charts
A proprietary trading firm or Prop firm is a company that gives out capital to invest in trades with the expectation that they will gain a percentage of the profits. These traders are proficient at trading and will make money for the prop firm, which makes them more attractive. One of the most common strategies that prop firm traders use is scalping. This is a common term used in forex trading which means making numerous transactions in the shortest time possible.
For prop firm traders, tick charts are extremely beneficial as they allow greater precision with entries and exits in the trades, which is essential in high-frequency trading strategies like scalping. In a prop firm where traders have to balance risk versus return in a short time, the ability to garner tiny profits consistently can tilt the balance towards success or failure.
For firm traders, minimizing exposure to the risk of market loss is critical. Most trades are executed using forex scalping techniques and thus, the likelihood of buying and selling at an advantageous snapshot of time within a few minutes or even seconds dramatically reduces the chance of incurring large losses. This is critical for prop firm traders as they are controlling firm capital, must manage risk within tight limits, and follow definite rules standard to all prop firms.
The discontinuation of tick charts contributed to the loss of commensurate strategies prop firm traders used to have. This is due to the fact that prop firm traders primarily relied on real-time price intervals and thus could respond to traders more precisely. The tick chart scalping tick charts enabled prop firm traders to act instantaneously in response to trades, speeding up the trading process.
Obstacles When Using Tick Charts While Scalping
Even though tick charts can be useful in a number of ways, there are still some difficulties presented by them. For starters. tick charts can put too much pressure on beginning traders. The fact that the price fluctuates continuously means that there is the potential of losing a lot of money for traders who don’t have enough experience with scalping or trading.
Because of the speed of which trades are taking place, Professional traders are used to only having a few seconds in are made other trades.
The downside of using Tick charts (fast pace) When a Professional trader acts as a scalper, he needs to be at the top of his discipline and focus due to rapid shifts in price. Price change accompanied by tick charts can become quasi market orders which sets forces behind reckless buying or selling.
Lastly, it’s vital to highlight that not every market or instrument is conducive for tick chart trading. For instance, in low-volatility markets, tick charts may not show sufficient price movement to provide worthwhile trades. Thus, tick charts are best suited for scalpers who have carefully selected their instruments.
Conclusion
Scalping with tick charts on MT5 can effectively support traders focused on capturing minimal price changes. With tick charts, scalpers have a detailed view of price action, enabling them to execute trades with precision. For prop firm traders, this method can offer the required flexibility along with risk management strategies to boost profitability while minimizing exposure to market risk.
As is the case with any trading instrument, mastery and self-control are prerequisites for utilizing tick charts. Real-time data streams provide an abundance of information; however, without a well-planned strategy, traders risk making reckless trades due to a surge in automation or respond without careful consideration. With sufficient knowledge and experience, scalpers can effectively navigate the MT5 tick charts to thrive in the scalping environment.