For those of you using the Advance/Decline line (NYSE, AMEX, Nasdaq or other) in your trading: 1. How do you use it? Or maybe the right question is; how does the majority of traders generally use it? Do you look for specific levels or do you just use it for estimating the overall trend or market sentiment? 2. Are there any specific "extreme" levels to look out for in this ratio? How high or low does it often go before mean reverting intraday? I just started using the AD but really like this kind of breadth indicators.
there's a good video on adv/dec, adv/dec volume and tick on the cme site: locate the "Equity Indexes" tab and look for How to Increase Your Odds for A Successful Trend Trade, Greg Capra. http://www.cmegroup.com/education/browse-materials/index.html
Let me spread some good karma. Using the $TICK instead of A/D will most likely be more helpful. Now if you can construct a real time $TICK with NeoTicker dot com you can get a edge because the $TICK from the data providers is only updated every 5-6 seconds. Register for their website and look up Neo Breadth. Supposedly, Trade Station can generate $TICK updates tick by tick. What you want to learn is market internals. There you go. Your welcome.
David22: Thanks a lot for the helpful link! dandxg: I know very well about market internals and the properties of the $TICK index, but in this thread I want to learn more about how people use the A/D lines. I appreciate your advice, but next time try answering my questions instead.
You can get $tick from nearly any provider, thinkorswim.com is free and they have it. As far as market breadth, advancers/ decliners, I use ticker symbol $issu with esignal. I look for over 1.5 as a sign that we're seeing more broad based buying and will wait for long oppurtunities. Under .5, I will look for short oppurtunities. Sometimes if market breadh is really extreme, like 6, I absolutely will not take a short, no matter how nice the set up. And of course, which way the breadth is trending is also important. If we start very low but steadily trend up, and other internals are also moving bullish, then I would take a long, even if breadth were under .5.
dandxg your post was not a waste of time, people dont know about neoticker which can be used to create a custom tick. I personally use tick along with uvol/dvol, adv/dec etc..