The Tick Trading: A Fast Technique For Traders
Are you also among those traders who hate holding trades for a long period? While you are not the only one. Waiting for profit requires a lot of patience, and not every trader has that.
Some traders love precision and speed. And there is nothing wrong with it. If you have the right knowledge, analytical skills and psychology, then going for a fast technique like trading tick is not a bad idea.
Wait, you donāt know about tick trading? Worry not. Here we will learn about the tick trading strategy, how to use it, and its pros and cons. So let’s get started.
What is tick trading?
Tick trading is a short-term trading strategy where traders take advantage of the smallest price movements, regarded as ticks and place multiple trades to earn small profits per trade.
A tick basically represents the tiny or smallest unit of change in the asset price. Traders can use a tick trading strategy for trading diverse assets, including stocks, commodities, forex and others.
The tick size varies from asset to asset and market to market. For example, in the US stock market, a tick can be of $0.1 or $0.5, while in the forex market, a tick size can be equal to 0.0001 for major pairs and $0.01 for Japanese pairs.
Confused? Let us have a look at a tick trading example: Suppose a stock price was around $25, a tick trader would consider entering a buy position at $25 and close a trade at $25.5 and make a profit of $0.5. You may think that the profit amount is less, however, a tick traders place multiple trades, so collectively it becomes huge.
Here's a quick look at what you'll read
Tick trading is a high-frequency trading strategy where traders focus on the smallest price movements, called “ticks,” in a financial instrument.
Tick sizes were once quoted in fractions (e.g., 1/16th of $1), but today, they are predominantly based on decimals and expressed in cents.
How to Use the Tick Trading Strategy
Grab an in-depth Understanding of the Market
Tick trading is a short-term trading strategy that requires in-depth market knowledge and top-notch analytical skills. So the first step is to select a market, get a detailed understanding of how it functions. Also, master technical fundamentals and sentiment analysis.
Select an Ideal Strategy
You can trade ticks by using diverse strategies. Below are the top options with key features. Select your favourite one accordingly:
Scalping:
Scalping is a popular tick trading strategy where traders take advantage of the minor bid and ask difference. They open and close multiple trades of seconds to minutes and earn small profits.Momentum Tick trading:
It deals with placing tick trades in the direction of prevailing momentum. Traders use diverse indicators and tools to identify trade momentum.Arbitrage Tick Trading:
Arbitrage is buying an asset from one platform and selling it to another in order to take advantage of the price imbalance of the asset on different platforms.Breakout Tick Trading:
Breakout tick trading is placing a trade every time the price breaks the key support or resistance level on the chart.Algo Tick Trading:
It deals with using automated trading bots and software to place tick trades. Basically, an automated systems identify and executes tick trades based on predefined conditions.
Watch Tick Trading Charts
When trading ticks, it’s better to use tick trading charts than normal charts. Price visualization and interpretation are better in a chart designed solely for this strategy. Multiple trading tick apps are available you can use them to spot tick trading opportunities efficiently. You can even use TradingView to watch tick trading charts.
Use Automated Software
With high-frequency strategies, placing trades manually is a tough task. Thus, use an expert advisor or automated bots for tick trading. You can develop your own system or select systems available on Meta Trader platforms.
Select Tick Trading Criteria
As we have selected that there are different tick sizes so select your tick trading size. Also define your risk-to-reward, time frame, leverage, analysis methods and other criteria. If you are using automated bots, set your strategy criteria. The automated tools can even organize the market analysis and place a trade accordingly.
Place buy or sell trades
Let automated tools identify buy or sell opportunities based on your select criteria, or manually identify them. Place multiple buy or sell trades. Also, analyze the results to make changes in the criteria accordingly.
Pros of Tick Trading Strategy
Quick Profit Withdrawal
With tick trading, you donāt need to wait for your profit for too long. You can get instant profit withdrawal within seconds or minutes, or according to your time frame.
Diversity
The concept of tick trading is applicable in diverse markets, including the stock, forex, commodities and others, so you trade varied assets using the same style.
Flexibility
As we have studied above, there are multiple tick trading strategies, so you have a choice to select your favorite accordingly. Also, you choose the tick size as per your needs. Like beginners can go for a large tick size for stable market conditions.
Automation
There are end number of tools and software available to automate your tick trading journey. In addition, traders can use tick trading charts for more effective results.
Cons of Tick Trading Strategy
Expensive
Practising tick trading can be costly for many traders, as you have to place multiple trades. And when you combine the cost of all trades, the fees make a significant amount.
Complex
Identifying multiple opportunities, using advanced technologies and monitoring different trades is quite complex. And a beginner with a lack of proper skills and knowledge will struggle in doing so.
Psychological Pressure
Tick trading has a significant impact on emotional balance. Many traders experience fear, anger, frustration and stress during the process.
Conclusion
Tick trading is undoubtedly a great strategy to withdraw profit quickly. You can use the style in diverse markets for trading a variety of financial instruments.
However, an advanced approach requires advanced knowledge. So when trading with this strategy, an in-depth understanding of the market and top-notch analytical skills are a must.
Also, identifying multiple opportunities can be difficult, but we can help you that. We at Carlos and Company provide multiple signals for high-frequency traders. Reach out to try our demo trading signals.
