Optimum duration for tick trading: 1 tick or 5 ticks?

Optimum duration for tick trading: 1 tick or 5 ticks?

Is there such a thing as optimum duration for tick trading? What tick duration gives you better odds of winning? With the BonusTrade tick trading app for forex and synthetic index options, you can trade Rise/Fall binary options for a duration of anywhere from 1 to 10 ticks. Should you trade 1 tick or 5 ticks? And why? Let’s dive in and take a look to see which tick duration makes the most sense.

What you need to know about 1-tick trading

In case you didn’t know, there is a one tick delay during execution of the trade. The tap to trade takes up a tick and it is the next tick that counts for the trade.

Note that 1 tick minimum duration is available in the BonusTrade app only for synthetics which include all volatility indices available, the Bull Market Index and the Bear Market Index.

Be sure to set your Duration (ticks) to 1 when trading for 1 tick. This setting is only available where 1-tick trading is allowed for the asset.

Should you trade 1 tick? The short answer

My trader’s instinct says no so the short answer is “No”.

Why? Because there is no margin for error and no give or take so technical analysis or trend following techniques go out of the window.

That said, 1-tick trading is there for a reason. Some people must like it. It is fast and fun. No attention span is needed, you get immediate results like rolling dice or tossing a coin. And the short answer is not the only answer.

The not-so-short answer

Here’s the not-so-short answer: “It depends”.

“Depends on what?” I hear you ask.

It depends on:

  1. What results you are able to get trading 1 tick consistently
    The proof in the pudding is in the eating as the adage goes. I was not a believer of 1-tick trading. I played around with it and managed to get better than 50/50 overall. Sometimes even 2 wins out of 3 or better.
    Take a look at the chart below. I played around trading 1 tick and managed to get 6 wins (orange dots) out of 9 trades in a few seconds.
    BonusTrade app 1 tick trading 2 wins out of 3
  2. What the chart looks like
    If you see a clearly and neatly trending chart , the pickings could be ripe for 1-tick trading.
  3. Is there any semblance of predictability?
    If the chart looks predictable like there is a clear uphill or downhill trend line, and/or clear support and resistance levels, 1-tick trading allows you to strike while the iron is hot. See a trend? Trade with it before it fizzles out. With 1-tick trading, there is no waiting around and missing the boat!
  4. Do you have a proven winning strategy?
    1-tick trading is no rocket science. Play around with it. Go with the trend, go with patterns and see what results you get. If you are able to get consistently good results, like 2 wins out of 3 or better, then you have a proven winning strategy. Make a mental note of that strategy if not a written one.

How about 5 ticks?

5 ticks is the default minimum duration for tick trading for very good reasons:

It gives you some leeway and margin for prices to move away from your entry spot price even when you get the 2 steps forward and one step back wave pattern.

When you are trading with a trend following strategy, this “breathing space” is particularly necessary so that one or two moves in the opposite direction won’t necessarily scuttle your chances of winning the trade.

For any trending strategy, at what point you enter a trade matters a lot and trading 5 ticks gives you a bit of space to pick your entry. In my last post on a micro-trend tick trading strategy, I talked about entering a trade at the retracement. You can do that more comfortably with a 5-tick trade.

5 ticks minimum duration is available for the 14 major forex currency pairs as follows:

AUDJPY AUDUSD
EURAUD EURCAD EURCHF EURGBP EURJPY EURUSD
GBPAUD GBPJPY GBPUSD
USDCAD USDCHF USDJPY

1 tick vs 5 ticks – the verdict

It comes down to your personal preference and your trading results. Having actually tried 1-tick trading and managing to get 2 wins out of 3 often enough, it is not to be sneezed at. From the trader’s perspective, the biggest appeal is the ability to strike while the iron is hot when you have a strong micro trend happening.

That said, I will be sticking with 5 ticks because more assets are available for trading and I have been able to get decent results with 5 ticks. 5 ticks is plenty fast for most of us already!

1-tick trading is a lot of fun. Don’t write it off and don’t take my word for it. You have to try it out for yourself before you can have an informed opinion about it. You can try 1-tick trading with the BonusTrade app. It’s free to download. You get a $10,000 virtual money demo account to practice trading with right off the bat when you install the app. No sign up necessary. Why not take it for a spin?

 

 

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