Discussion in 'Technical Analysis' started by Joe Ross, Aug 23, 2010.

  1. I get some unusual questions from time to time, and this is one of them.

    Certainly, the TICK can be used with Stochastics, as I explain below. The TICK expresses the net total of NYSE stocks that have down-ticked or up-ticked on the last trade. When e-mini S&Ps are making new intra day highs, the TICK should be +250 minimum. If the TICK is negative, do not take a long position. When new intraday lows are being made, a -250 minimum value should be recorded. If the TICK reaches over +500, try to buy a Stochastic D line correction at 50 or lower, and expect new intraday highs. After 2 PM CST, the pit-traded T-Bonds close and E-mini S&P prices are prone to rally if they were being pressured by the T-Bonds.

    The TIKI does the same thing for the Dow 30 as the TICK does for the NYSE Stock Index. It measures the tick for the 30 DJ Industrial stocks. However, I am not able to tell you exactly how to use it because I haven't really ever looked at it. I'm sure that at a value which shows TIKI to favor a long position, and with the Stochastic at oversold, you would have corroboration for going long. Vice-versa for going short with the Stochastic at overbought.

    The TRIN calculates two ratios of up and down volume on gaining and losing stocks. Below 65 the TRIN is bullish; it is bearish above 110. If you seek confirmation of TRIN for a bullish position, you would want a Stochastic reading of 25 or less. If you wanted confirmation of TRIN for a bearish position, you would want to see Stochastic at 75 or more.

    Numbers can be very important. Did you know that the probability of financial ruin of a system 50% accurate with a 1 to 1 pay off risking 10% of capital on each trade is .99%; with a 2 to 1 payoff, the probability of financial ruin falls to .008%?
  2. I haven't done the maths (and anyway, would have to dig out my A-Level probability textbooks to remind myself if I even could) but intuitively I feel this probability should be 99% (not 0.99%)?

    Now, I'll go and hunt in the attic for my textbooks ...
  3. j b

    j b

    Think you're right - it's known as gambler's ruin.