Hi, Does anyone use market internals for (day) trading the US stock indices (NQ, ES, YM)? I played around a little with the NYSE TICK back in the day, but didn't find anything useful back then. Would be interested in testing it a little more now. Just pulled up a chart, but the raw data looks a bit noisy. I think the general idea would be to utilize extreme tick readings and divergences. I know Brett Steenbarger have written a lot about this indicator. Anyone? Howard
Howard, IMO you are perceptive, inquisitive, and way above average for the intelligence to be a competent, Profitable Trader. You have been on ET since 2014. What is the "game plan" that you are seeking?
Hi, MACD, Thank you, I guess. It's been 4 years already? Well, I've been trying to put together a 'game plan' way longer than that. My focus is on day trading ES with daily profitability. Entries and exits need to improve. I was hoping market internals could possibly assist. Any thoughts or advice? Howard
Perhaps you already answered the question. I suppose I was mostly interested in what experience people have with these indicators and if anyone is using them to assist their trading (entries and exits) in a meaningful way. Do you have any specific rules for how you use it? What's your definition of extremes? Predefined at say +/- 600 or do you gauge it based on what's happened on that specific day? One thing I recalled from back in the day when using it was how extreme tick readings and no follow through could be considered a form of divergence. For example; extreme tick readings at a LOW, but price stalling and even putting in a higher low. Put another way; if extreme selling can't move price down; up we go. At least you should take profits on a short on such a signal. IMO. Regards and thanks. Howard
Yep, that. I see a flush and I just want to see how extreme the TICK reads. Extreme is -1000 and beyond. I'm curious what people think about TRIN. It never made any sense to me to categorize green/up volume as bullish without any context.
I spent years playing and twisting data from these market breadth indicators by using different time frames, but I found they weren't helpful at all for SCALPING or DAY TRADING. At extremely oversold or overbought levels on DAILY time frame, such indicators might help you to figure out short-term top or bottom. That's it.
I been working on system using the NYSE Tick and Nasdaq Tick for past 21 months among others. I devised risk management unit as years gone by, it is a separate entity. I am nearing the end of back/forward testing past 15 years. I have fiddled with NYSE Tick for approx. 30 years, the Advancers/Decliners always worked better for longer or swing trading. I discontinued applying +/- extremes as found it showed full losses as in number per week in scalping to be greater than I desired and often weeks go by and no trades happen or very few and they were no better than flipping a coin for me as a scalper. I have discovered patterns that re-occur and recently discovered a way to discontinue taking trades at "ends" (market has to have traveled 7-10 points in normal volatility to define "possibility") of a trend and then certain pattern develops to show not to take more signals. I rate signals not in minutes but how many seconds to target, no signal should last more than 90 seonds Had to finally use "ATR" to expand targets/risk into a scalping system. The NYSE Tick often times leads the ES and it should cause ES is a future and not a stock, but that does not mean when NYSE Tick turns the ES follows. I decided to change my way of thinking this time around, whereas ES is unlimited movement, and I now look at the TICK as defined movement similar to RSI boundaries from 100 to 0. When Tick goes extreme it pegs out at 100 or 0, signals shut off at those extremes for me. I have discovered four re-occurring patterns and using risk management tools shows very workable within my parameters of lessen losses, system shuts off once one loss happens then waiting period ensues. It been fun doing this as it is with other system that takes signals off a different cash index other than S&P500 to trade ES. But as far as trading it like most of the books show, I stayed away from how retail would trade it. Divergences showed unacceptable intraday drawdowns, it is not a system to take any counter trend trades, like the old phrase "Trend is your Friend". I don't see NYSE Tick to make decent moves of points unless volatility is way up and of course risk way up as well like in 5 points which is HUGE for a scalper. And I don't see usefulness above 3 minute timeframe, but others may have found ways to use larger timeframes. Trin seems to work better as a Swing indicator on daily bars. I use "Advancers/Decliners" as more of a fundamental reasoning, like the same as Transportation Index and unemployment stats. When more lines up can give truer picture, but still up to the trader on what to do.
It took me 14 years to get my daytrading plan. Those indicators are hyped by a well known Market Wizard. I personally think they are useless and she is less a great trader than she is made out to be. But she is flexible which made her survive. Don't go down that road.
I had been a big fan of SMA(6) on TICK and TRIN back in the day, but (NYSE) TICK became useless on IB, and eventually, TRIN as well. FWIW, an SMA(6) on VIX9D has done (for me) as much as TICK or TRIN ever did, and better. (And half the screen real estate.)