Overview of the Tick Chart Trading Strategy
The name “Tick” itself hints at a very short-term strategy. That’s totally true. The original version of this technical system is applied on 5-minute chart, allowing traders who love sitting beside the computer and looking at the platform to collect trading occasions often lasting for around five minutes or less. However, it initially doesn’t mention setting a stop-loss level, therefore, in this article, we intentionally change some terms to improve the strategy performance. In case you still want to use the aboriginal one, we suggest that the take-profit level shouldn’t be set more than 15 pips.
To use the system, let’s apply the following indicators on the chart:
- 50-period Bollinger Bands with the deviation of 2 (black)
- 50-period Bollinger Bands with the deviation of 3 (blue)
- 50-period Bollinger Bands with the deviation of 4 (red)
- Relative Strength Index (RSI) with the period of 8
- Stochastic Oscillator with parameters 14, 3, 3.
Mutiple Bollinger Bands with different colors are applied to identify trading opportunities, while the RSI and the Stochastic Oscillator are responsible to confirm whether the signals are worth entering or not.
Having carefully been tested for the last eleven months by us, this technique has made more than 1300 pips with a win-rate of about 82%.
How to Use the Tick Chart Trading System to Trade Forex
Our modificative version works best on 15-minute and 1-hour charts. As we have mentioned, you will have to observe the Bollinger Bands to define signals, and confirm them with the leading indicators (RSI & SO).
A bullish trading opportunity is confirmed when:
- Prices rebound from the lower blue band and present signs of a potential reversal.
- RSI line stays above 30
- Stochastic Oscillator lines must be above the 20 level
Conversely, a bearish signal is identified when:
- Prices bounce off from the upper blue band and expose signs of a potential reversal
- RSI line remains below 70
- Stochastic Oscillator lines must be below the 80 level
The stop-loss level should be 45 pips. After moving toward the expected direction, the stop-loss could be transfered to the breakeven point.
The take-profit level could be set at the central band, or a fixed figure of 100 pips.
Advantages and Disadvantages of the System
- Relatively easy-to-use
- Generating highly accurate signals by strict checking requirements
- Enabling traders to profit from short-term market conditions
- Requiring a high level of patience
“Tick” is a popular and effective technical system and is especially suitable for short-term traders who are capable of constantly observing the trading platform. We believe that if you disciplinarily follow the entering rules, earning substantial profits in such a volatile market as Forex is entirely possible with this technique. However, while enjoying our recommendatory tool, please don’t forget to apply basic technical knowledge in addition to risk controlling and psychological managing methods to not only minimize the risk but also maximize the income.