Hi Anna, I have recently purchased 3 or your books and am currently nearing completion of Forex for beginners. I then intend to move on to a complete guide to Volume Price Analysis and a 3D approach to Trading. I would firstly like to say that so far I have found the book excellent, with very clear concise explanations coupled with a refreshing honesty that makes it a really enjoyable read. However, there is one subject that I am struggling with and I am not sure I fully understand it, hence this e-mail. You have explained than on a forex chart, the ‘volume’ indicator is actually a tick count which represents how many times the price has moved in the time frame being charted. I can accept that in certain circumstances this could act as a window into the actual volume of trades, but my question is this, if a large institute made one very large transaction in a currency pair how would this affect the tick count? Might we only see one tick as the price moves once in relation to this transaction?
Hi Many thanks for your email and your kind comments which are much appreciated. Also many thanks for buying all three of my books and I’m just so pleased you are finding them clear, concise and enjoyable.
With regard to tick data and tick charts this indeed can be a confusing and complicated subject so let me try and clarify this for you, if I can. Perhaps if we start with the definition of a tick as it relates to the futures market. In this case the tick count, as it appears on my NinjaTrader platform, is simply the number of trades going through. We have no idea of the size. So, for example, an order for 1 contract or 1000 will register as a tick. As you begin to study volume across various platforms you will find that some volume is reported as the number of trades (ie ticks) whilst others record the volume as trade size, in other words the total number of contracts traded rather than the number of orders or transactions.
Moving to the forex market, where as I am sure you know there is no central exchange, the tick count here is what is provided by your broker, and is really a change in price. Some forex brokers are now introducing volume based on customer orders to try to represent ‘true’ volume for the FX market.
I hope this helps to clarify this for you and thank you again for taking the time and trouble to write to me.
Kind regards – Anna