Definition: A tick chart is a type of price chart used in trading that displays the price action of a financial instrument based on a specified number of transactions or ticks. Unlike traditional time-based charts, which plot price movements over uniform time intervals, tick charts update every time a set number of trades occur, providing a detailed view of market activity and price fluctuations.
Understanding and utilizing tick charts can be highly beneficial for active traders. Tick charts offer a granular view of market dynamics, revealing short-term trends, patterns, and potential trading opportunities that may not be visible on time-based charts. By using tick charts, traders can gain insights into market sentiment, identify precise entry and exit points, and enhance their ability to execute timely trades, especially in fast-moving markets.