Please pass on to Mr. Bellafiore that his book is the best one I’ve read on prop trading and on my top 10 of trading books, maybe top 5. 🙂 Not that would mean a hill of beans to him but regardless, it truly was an enlightening book. If he has a few minutes I do have a question to ask.

Is there a specific reason why time based and not tick charts are used? It seems logical to me that tick charts and “reading the tape” would go hand in hand. For example, pulling up a 1min chart and a 110 tick chart, the tick charts seems to have less noise than the one min thus allowing a more “Trade2Hold” out come for a few more bucks. :). But if I’m screwed up like a soap sandwich, please enlighten me. :)) I’m just trying to seek out some additional knowledge from an established trader.

Bella Responds:

1) We do use tick charts. We use them for pre-market and After-Hours trading. We use them to check what happened around important levels. A few use them right on the open on our desk.

2) Tick charts are not as important to us since we can Read the Tape. We see with even more detail what the tape is telling us by watching the Level II. Those who just are reading charts might hammer down to a tick chart for entry decisions that we can spot from the Tape.

3) You want to consider multiple time frame when you trade. So if we get our smallest time frame information from the Tape then we want to use another time frame from the charts to make better decisions. So we might start with the Tape and 1m charts on the open. Then we might move to the tape and 5m charts after the open.

Thxs so much for your question and kind words about One Good Trade. I hope that helps.

Mike Bellafiore

Author, One Good Trade