1.2 The limits of charts
Virtually every course, every strategy, and every retail trading community starts from the same place: a time-based chart. You take the market, slice it into intervals (1 minute, 5 minutes, one hour), and analyze what price did in each interval. Moving averages, RSI, candlestick patterns, support and resistance. All built on the same premise: that dividing time into a timeframe allows you to anticipate the future.
The problem is that this premise does not hold up. In the previous lesson we saw that 90% of retail traders lose money, and the vast majority of them trade exactly this way. In this lesson we will see why.
Anatomy of a candle
A candle represents a time interval (one minute, five minutes, one hour) compressed into four numbers: open, high, low, close. These four numbers are all that survives from that period.
To understand what gets lost, think about what actually happens during a single minute of active trading on the E-Mini S&P 500: thousands of individual transactions pass through, each with a price, a volume, and a direction. On the order book, quantities change constantly as orders are placed, modified, and canceled. There are moments when buyers and sellers are both active, and moments when flow goes in only one direction.
All of this gets compressed into 4 numbers. The thousands of transactions, the direction of the flow, the behavior of the order book, the sizes of the orders: all gone. The candle shows you the final score of a match without telling you what happened during the game.
Three structural flaws
The problem with charts and indicators is not one of detail: it is structural.
1. They create a predictive bias
When you look at a chart with indicators, your brain automatically starts searching for patterns and forming expectations. "Looks like a double bottom," "The moving average is about to cross," "Support should hold." These expectations become a filter: you see what you want to see, you ignore signals that contradict your idea, and you enter a position based on a hypothesis instead of what is happening right now.
Professionals know they need to observe the market as objectively as possible, and a chart full of lines and indicators does exactly the opposite: it makes you subjective.
2. Professionals do not use them
If technical analysis worked, it would have been massively adopted by professional traders on trading floors around the world decades ago, but that never happened. Professional market makers, the ones who trade the markets every day, year after year, with consistent profits, do not watch charts, do not draw trendlines, and do not look for patterns.
Technical analysis has remained largely confined to the retail world, and that is no coincidence: it is easier to sell a course based on "simple rules" derived from a chart than to teach the real dynamics of the market.
3. They simplify what cannot be simplified
The market is a complex system with thousands of participants acting simultaneously, each with different motivations, information, and time horizons. Reducing this complexity to a line on a chart is like trying to understand a conversation among a thousand people by only looking at the volume of the noise.
Technical analysis takes what has already happened and simplifies it further, but this simplification strips away exactly the information that matters most: who is buying and selling, how much, and with what urgency.
What we use
In Tick by Tick we do not use charts, technical indicators, Market Profile, Volume Profile, or any other method based on accumulated past volume. We use two tools:
[ side-by-side screenshot of the DOM and Tape on the E-Mini S&P 500 during an active market session, with visible orders on both tools]
The DOM (Depth of Market), the order book. A vertical table that shows, level by level, how many contracts are waiting to buy (bid) and how many are waiting to sell (offer), in real time. It is not a summary of the past: it is the state of the market right now.
The Tape (Time & Sales), the stream of actual transactions. Every single trade that gets executed, with price, volume, and direction. It does not tell you what might happen, it tells you what is happening.
These tools do not tell you where price is going. They tell you what is happening right now, and that is the only information that matters.
A choice, not a dogma
I want to be clear on one point: I am not saying that technical analysis never works for anyone, in any context. I am saying that for scalping, on our time horizon, it provides no edge.
When you operate on a horizon of seconds, what price did an hour ago is irrelevant. The active participants now are not the same as before, liquidity conditions have changed, and the context is different. Technical analysis implicitly assumes that the past repeats itself: for those who trade on longer horizons, maybe that assumption has some merit, but for those who trade in the present, it has none.
In Tick by Tick we never try to predict where price will go. We operate exclusively in the present moment, reading what the market is showing us right now, and making decisions based on what is happening, not on what might happen.
In the next lesson you will discover why this approach has a concrete mathematical edge, and you will see the numbers that prove it.
Key takeaways
- Technical analysis is built on the flawed premise that the past predicts the future
- A candle compresses thousands of transactions into 4 numbers, eliminating nearly all useful information
- Three structural flaws: it creates predictive bias, professionals do not use it, it simplifies away who is buying, how much, and with what urgency
- We do not use charts, indicators, Market Profile, or Volume Profile
- The DOM shows the market level by level in real time; the Tape shows actual transactions
- For scalping, the only relevant information is what is happening right now