Thank you for taking the time to condescend to me. It is unfortunate that, before you wrote your response, you did not take the time to read what I wrote. I do not use TRIN. I am not looking to apply TRIN in my trading. I am sufficiently engaged with the manner in which I presently trade. Rather, since TRIN is a mathematical formula, I was hoping someone would take the time to actually explain how it clarifies rather than confounds for the reasons that I had noted. My request was sincere for the very reason that I am aware that a fair number of people use TRIN. However, I have difficulty understanding why, after looking at its composition. I'm not suggesting it cannot be used to positive effect, and I wrote this earlier. Whereas your response is nothing more than an air-headed sneer. Do you now understand what this thread is about? And if not, then let us discuss your powers of comprehension in another thread.
"As a trading indicator, the TRIN is probably not that useful. It's widely following by technical analysts and incorporated as a data point in many computerized trading programs. As such, the value of futures contracts or other instruments representing the overall market usually have TRIN indicators factored in. Nevertheless, watching the TRIN on an hourly basis can give you a little bit of a clue as to how the day might turn out. The TRIN is published hourly on Briefing.com's Market Internals page." Robert V. Green http://www.briefing.com/GeneralInfo/Investor/ToolBox/LearningCenter/edu_Trin.htm
I like to look at TICK and TRIN together. To me, TRIN almost verifies if TICK is worth paying attention to. If TRIN is below 1 lets say, then lets pay attention to the TICK. For example: 500 advancer / 1 decliner = 500 5000 volume advancing/ 10 volume advancing= 500 So 500/500 = 1. The 1 trin value verifies that TICK or advancing or declining #s are driven by volume. Other example: 500 advancer / 1 decliner = 500 10 volume advancing / 5000 volume declining = .002 TRIN would equal 250k. It shows that there's no volume on the advancing shares, so don't trust the TICK or advance/decliner # to make a trade, since there may be little follow through. Perhaps TRIN is indirectly a volatility indicator? Lower TRIN = expect less volatility after the trade since the previous activity was confirmed with volume. So in my eyes, TRIN merely tells you if trading is backed up by substantially *agreeing* volume. I guess it all depends on what you believe volume means. If you believe you need volume to justify a trade, then pay attention by all means. Otherwise, it will guide you in the wrong direction. Interestingly enough, on today's Index pop at end of day, TRIN was actually RISING while the buying was occurring (on NQ, which I looked at) and inversely, TRIN was DROPPING on NYSE at the same time. I don't know quite what to make of it... Some more thought: often TRIN is high for volatile days because I would imagine much of selling can occur on little volume [ie bid keeps dropping without getting filled], with more volume spent on retracement (uptick). So with that factored in, TRIN might provide more false signals than correct. Psychologically, if you have a falling knife, buyers get out of the way, and you can drop on a lot less volume than steady smooth buying allows.
" Yes, it's about the ratio, but you can get the same ratio and ratio trend values with potentially very different underlying market scenarios " again, i will repeat this - it is the TREND of the TRIN that matters (at least for my setups), not the #. please explain to me how (you believe) you can get a dropping trin with SELLING pressure. that's the point. (dropping TRIN denotes buying pressure of course). look at the formula and note what factors would give a lower trin. those same factors are consistent with increased buying pressure the TRIN is also nice because it gives benchmarks for extremes. a TRIN over 1.85 is an extreme that has a VERY high likelihood of reversal, for instance. regardless of how it is created, an extremely high or low TRIN reading tells you something about the extent of the market pressure, and a likelihood of reversal. but at least you had the honesty to admit yer math was wrong i can respect that
(500/250) / (5000/2500) = [1] (125/250) / (2500/3000) = [.60] Second number has less advancers (selling pressure) and there is more net selling volume. The TRIN shows ratio of advancers to decliner is simply less than the ratio of total buying to total selling volume. But look for yourself, 2nd number has net selling pressure and dropping trin. It can be a deceiving indicator, especially when you consider there are different ways volume interacts with selling and buying, as I explained in my previous message. The only thing I can agree with is that perhaps a lower trin indicates less likely volatility (tendency for reversal).
If you do the math, Investopedia's TRIN equation can be rearranged as: (advancing issues/volume of advancing issues)/(declining issues/volume of declining issues) and it will be apparent that TRIN is a weighted ratio of adv issues to decl issues.
the trin is simply a derivative of price/volume, like many indicators. it is only "Deceiving" if you don't use it in a methodology that has an edge. i can't even IMAGINE trading without the trin, but to each their own.
You can rearrange the equation any way you like, either as I did, or otherwise. It does not change the mathematical fact that you can get the same ratio and the same trend in that ratio with potentially very different underlying market conditions. You don't need to take my word for it. It's there in the arithmetic. My point is that if TRIN can be slippery in this way, then its utility is in question. And if I am wrong, I would like someone to point out the specific flaw in my logic. I have often admitted to being wrong and I will gladly do so again. However, I need a bit more than a simple assertion that I'm wrong because it works for you. If it does work for you, I'm glad. And I'm not looking to learn your secrets. Rather, I would think that most effective, practical tools for trading the markets also have a sound theoretical underlying premise. I am simply asking for someone to show me how TRIN has a sound underlying premise in view of the above noted apparent mathematical discrepancy. Therefore, there is no need to be offended or to get defensive simply because I fail to grasp what is apparently a very basic premise to some of you. (I'm not suggesting that you, specifically, responded in such a manner.)
the TRIN is: (Number of Advances / Number of Decliners) / (Advancing Volume / Declining Volume) look at the numerator. the more that advancers outnumber decliners the higher the #. that is the (simpler) A/D ratio Advancer/Decliners. TRIN takes it a step further look at the denominator we've got TONS of declining volume even as we have a relatively high # of advances. TRIN would show that discrepancy. A/D would not. similarly, we have higher advancing volume but still a higher # of decliners. TRIN would again account for that discrepancy basically, we have an issue of reification here, (besides your initial mathematical problems). th e problem is that you assume that TRIN is some sort of perfect indication (it isn't) and then set up fabricated counterexamples to try to prove its inadequacy. there is no "magic indicator". TRIN is no different. it merely looks at a relationship between 4 different factors (of price) and quantifies it. that relationship is meaningful, but it is hardly perfect. can trin go down and price go down? of course. is that counterintuitive? yes. i can sit here and cherry pick examples that would make TRIN **seem** to have less (or more) utility. one can do the same with trading systems. it's called curve fitting. but the reality is that TRIN simply puts several factors TOGETHER (A/D & relativel volumes of each) to give you a quick view of what the cash market is doing and how that trend is changing (or isn't). is that valuable? yes.
thunderdog, I am a major advocate of technical analysis. As a consequence I focus on a lot of aspects of TA. Below is a view of my focus on TA although you may read into it some judgements of me personally. You can see that where that occurred in the thread it necessitated that I not answer the questions asked of me any further in that thread.(about three pages of them after I posted a "see attached" post to not be disruptive. "You should probably take those questions and start another thread with Jack. As big as this thread has become it has stayed surprisingly on-topic, but if you get Hershey started it will spiral out of control into an incomprehensible mess. I am not trying to be overly critical of JH (he may have the holy grail for all I know), only that I have never understood any of his posts, and they are the antithesis of "simple profitable method". Do a search and you will find plenty of his reading material to keep you busy for several lifetimes. Be careful with all of the "tweaking", there are no magic settings and you will drive yourself crazy trying to get an indicator to signal every move perfectly. Adding extra indicators, constantly changing the parameters, and deviating from the rules will kill everything: the simplicity, the profitablility, and the method. So my former comments in this thread are being viewed accordingly by this poster. I read what you wrote repeatedly. I digested it and oriented myself to the situation. It is very clear that you do not use TRIN. I get it. TRIN is an indicator that is prominent with some strategies in making money using TA. I am not allowed to refer to web sites as a condition of participation here. And I was just being direct and fair in my comments about what is what when it comes to dealing with TRIN and that includes all aspects: theory, validity, and practice. Ratios in making money stratagies are very important. Going further, the ratios that are created and that become standard for TA people all have validity for the knowledgable, skilled and experienced traders. Here you have been informed by others that the numerator ratio and the denominator ratio are important for good reasons. TRIN is a ratio of ratios as we who use it profitably and most all see and understand this characteristic. Consequently you have been given some input (not by me) about the topic: "wrong". Speaking directly to you on your level and me on my level, I am suggesting to you that the alegebra manipulation you did to what you read somewhere may be something, in the form you prefer to use it, is like the results the above quoted person who operates as he says he does also gets to live with. Both of you are doing something for your benefit that is taking you well away from the possibilities of having TA tools that are useful. Let me agree with you that what you have manipulated TRIN into the form you have determined, has no chance of giving you results that are going to make you money have any theoretical value nor be valid in any way since there is no theoretical value left. And, to repeat, you and I know you are not using it and you are just looking at TA theory and an aspect of TA that relates to validity. You are in an unfortunate place from a theory and validity point of view and I am not in an unfortunate place. I wanted to allow you to learn about the theory, validity and applicability of TRIN*. So I gave you two valid super applications of how a ratios of ratios may be used. I do have the capabiltiy and knowledge to really and deeply explain to you and the learner quoted above just how theory and validity is verified by expert practice, either by reference to several practioners or by personal observed verifiable demonstrated experience. When you got input from someone, not me, and you are told about trend analysis as the applied theortical application where the validity is most easily demonstrated, it is of courrse prudent for you to tell that person to do what you ask before you check out what he, powerfully and based upon successful experience, suggests to you. My examples gave you the periodicity, the stop arrangements and the rate of money making that commonly occurs with TRIN utility. This is simply a verification strategy that people commonly use with respect to theory and validity of theory. Commonly it is understood that having the performance of a ratio down in theory, validity and practice is a starting point. You have two ratios here to deal with so it is a good idea to deal with both individually and then in combination. What is the result? The combination in theory, and as regards to validity and practice has a new aspect that is not seen in each of these two individual compoments as separate tiems. The person who posted to help you other than myself trades primarily in a scapling modus as we both know. Other who use the paried combo of the ratios deploy the unique theoretical and valid aspects of TRIN in two other separate and distinct applications. Both are leading indicator applications of traders who are "masters" of taking money out of the markets. They trade at the frequency level of a poster here amed proflogic. You have eliminated two ratios from the TRIN and you have eliminated the ratio of ratios aspect of TRIN. So now you have a pile of legos that can be put back in the toy box. I'm not saying anything to you other than an adult direct and comprehensive statement on what is what. TRIN defines selling pressure and selling pressure does not just appear; it eases into the context and is very valued theoretically and practically. *TRIN is most often associated with bicycle exits after all in entries upon the unique leading signals that TRIN exhibits as a combo of two ratios.