Tick Data vs OHLC Data – Charts – 14 June 2022

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Tick Data vs OHLC Data – Charts – 14 June 2022

There are many questions about which data is reliable at what condition.

There are basically two types of data available in market for analysis. Tick data and OHLC data, we will discuss both data usage in detail and how information from these data can be useful in what scenario.

Tick Data :

Definition : Tick data is a type of data which is realtime and provided to end user in realtime, at 0ms speed

What is Bid price : Bid price is a price which meets a seller’s demand to execute order

What is Ask price : Ask price is a price which meets a buyer’s demand to execute order

How a tick is generated? : When you press buy or sell button to initiate or end any trade, it searches for bid and ask price in book depth. When your order is matched with bid or ask then a tick is generated upwards in condition when your buy order is matched with ask price or downward in condition when your sell order is matched with bid price. If you place a BUY order at price of 100 and it matches with ask price at 100.1 then it will form a candlestick with 1 point upwards, If you place a SELL order at price of 100 and it matches with Bid price at 99.9 then it will form a candlestick with 1 points downward. In Bid and price is too far from your price 100 then it can form bigger candlestick. Why bigger candlestick are formed? They are formed when market having low liquidity and someone adds any order which is larger than available in Bid / Ask matching price, price will slip. if market liquidity is good but still someone places aggressive orders with large quantity, it matches Bid ask quickly and price may make a very big candlestick. Unfortunately there is no control over position size so anyone can put as much order as an user may want, In case even if there is a limitation of max position size by broker, there is a very easy loophole than any trader may use multiple accounts from family or friends to place (sometime there are groups of pump and dump where they buy sell at same time) same orders and a trader may also use multiple brokers that will cause market crash or rise very quickly within seconds.

Usage : Tick data can be considered as an unprocessed data, The reason to call it unprocessed is that a retail trader’s computer may not be able handle to thousands of ticks generated in a millisecond and internet speed or server speed may also be responsible in losing ticks information, So its only useful for EA which sends BUY or SELL signal in realtime to broker server. A broker server can only handle tick data without any error, because they may use high end devices and fast internet. A broker usually process ticks from 00:00:00 to 00:59:59 and udpate the candlesticks so a trader can study this and follow technical analysis. Another application of Tick data is useful in algorithms which follows up the model of HFT (High frequiency trading). HFT systems usually do entry exit within seconds so they follow up time frames less than one minute, in this case ticks are very informative. If you are a trader who draws lines on chart, do technical analysis, checks high low of a candle to find swings then You should always look for OHLC data because this is only best data for manual analysis

You can check my product which updates your chart with Real Ticks at 0 ms for Crypto at : https://www.mql5.com/en/market/product/77704

OHLC or Rates Data :

Definition : OHLC data is a type of data which is usually provided by brokers after processing ticks from server and may not be realtime because it takes some time to process ticks. For example Binance server provides Tick data at 0ms but Rates or OHLC data at 200ms speed, This 200ms is considered for analyzing and processing ticks by server to finalize it in final and processed information

What is OHLC : OHLC stands for Open High Low and Close of a candlestick. These 4 elements are only major part of a candlestick from which an analyst can find a lots of details about how price moved withing a closed candle of any particular timeframe.

How OHLC data is generated? : OHLC is a processed data which is provided as a history or with a small delay from broker, This data is generated after processing ticks.

Usage : OHLC data is final and  processed data, This is always a correct data and once a broker provided OHLC info, the decision of rates if final and it will never change in history of data.

The use of OHLC data is for technical analysis, you get correct high low which were decided by broker’s algorithm which process ticks. This is also used in backtesting your strategy.

You can check my product which updates your chart with OHLC data for Crypto at : https://www.mql5.com/en/market/product/77642

Issue : Broken Tick data provided to end user

In Many brokers which are linked with NSE, many people reports that their SL hits even when price did not go into that price in chart, Its because of two reasons

1. Incoming Public Data : providing false and inaccurate data from exchange via broker to end user

2. Outgoing Private Data : Providing 100% accurate realtime data for trader’s execution

so when your SL hits, its due to outgoing data which you cant access but when you try to find on chart you never find price on that area where your SL hits. More easily, the information sent you is tracked by exchange or broker from realtime data, but the information you see on charts for candlestick is inaccurate data

This actually is a shady thing, Broker may blame exchange and exchange may ask you to read policies, so a trader may still be very confused about why this happens. The main reason behind this is Failed Ticks. An exchange provides data to broker, A broker may have full control over it, how to pass it to end user. A broker from NSE once said on social media that they cap their data which is received from exchange with 1 second delay because they have thousands of users and providing each of them the true tick data is a costly solution. so they provide a broken Tick data and which is very harmful for retail scalper.

Another exchange also explains this in detail here

You will be amazed to know, True Tick data is sold for 25643 USD Approx by exchange just for terminal usage. Source is here which makes it clear that true technology is far away from retail traders in some exchange like NSE.

They also process data overnight by converting ticks into Rates using a software Bhav Copy, due to a very slow technology they have. So any newbie trader will be amazed to know that the chart he traded yesterday is no more similar than what he is watching the next day and may scratch his head in wonder. Source here

I hope this information is helpful for newbie trader, Please like the blog if you find it useful. Thanks

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