Technical analysis is very important to most traders as it provides the back bone of your trading system wherever you will be a day trader or a swing trader. And the beauty of this you can apply it to any market or time frame, you just have to take the time and do research on which indicator set you would like to use.
Chart Types
Time Interval
Now most traders use time charts to apply their technical indicators. A time chart is simply a new bar or candle appears at the specific time you request on your charts, an example of this would be 5 minute intervals so every 5 minutes a new candlestick will form regarding the price volatility.
The big advantage of time based chart relationships is that all brokers include them at no extra cost in your trading platform.When time is the only consideration though, important things like volume and trading activity have no affect on the chart as the same number of bars will print everyday no matter what happens in the market.
Tick Charts
Now these are my personal favorite so I may be a little biased here as I trade them exclusively as they give me a better over view of the price action.Tick charts are beneficial because they are trading activity that is currently being seen in the market. Tick style trading charts are based on the number of transactions that occur per bar, this is important you can see when the market is very active or the opposite when the market is very slow with little volume occurring at the moment. For example an 89 tick chart requires that 89 trading transactions are needed to have happened before a candle will form and the same in a 233 tick chart where 233 transactions need to happen before candle formation.
But they are not just for small time frames either you can use them to slow up the chart action by using a 375 or 610 tick charts for your swing trading analysis. I use a 610 tick chart to determine the overall trend of the market.
These are not free charts which is there down fall but you can use a charting package such as ninja trader which is free to use and subscribe to a data provider such as Barchart and get live market data directly into ninja trader. But as a trader do you think that it would improve you trading or help with your analysis of the market, I think you might be quite surprised the information that can be taken from them.
Volume Bars
These are similar to tick charts so if you use a 2000 volume chart when 2000 transactions are completed a new bar will form. Many traders use Fibonacci numbers to determine what size volume chart they would like to use.
Range Bars
Range bars are based on the changing of price at a certain range you choose. For example a ten bar range chart on the Russell means that if the bar opens at 583.0 are new bar will not be formed until a price of 584.0 is reached if going long or 582.0 if shorting the market. By their nature a new bar is opened when the high or low of the specified price movement is reached.
A benefit to the trader using range bars is when the market is in periods of consolidation. In these times during the trading day fewer bars will be printed which in turn will help eliminate some of the market noise.
Overview
As you can see there are significant advantage over time based charts using tick, volume or range bars, but unfortunately you will have to purchase a data feed into ninja trader if your broker is not compatible (refer to their websites as many brokers are). As new traders you might want to just use the charts made available to you by the broker which is fine. But as your knowledge grows you may want to consider these as other options
