Tick Indicator

Discussion in 'Trading' started by jlcarey1, Jul 12, 2003.

  1. jlcarey1


    I found this quote from a website:

    "The tick indicator is a number which comes out several times each minute during the trading day. It shows the total number of NYSE (New York Stock Exchange) stocks, at that given instant, that are trading higher than their last price minus the number that are trading down. If 1800 are on uptick and 1200 on downtick, the number would be +600. Readings between +/- 400 are considered neutral, readings of +/- 1000 are considered extreme. On rare occasions, readings like +/- 1500 may be seen, but this is very unusual. We plot this number as a green line below the price bars (see chart above).

    There are several way to use the Tick indicator, but one of the most primitive is simply to think of it as the "gas pedal" for the market. If ticks are +800, that shows a lot of buying power is currently going into the market. This would be a bad time to buy because that power is likely to soon exhaust itself and price may fall. The way we use this indicator is to look for a trending market, and to enter when ticks retrace near 0."

    What is the symbol or name for this Indicator???
  2. nitro


    The best thing you can do is to put it up on a chart and watch it with your own two eyes and see how/where the things that you are interested in trading are affected by it. Don't read anything by anyone that has written on it. Later, when you get a feel for TICK, read all you want about it and agree or disagree.

    The symbol depends on the feed. For me it is $TICK, etc, etc.

  3. lmt


    Does anyone find the tick less effective since the switch to decimals? Since it only takes a penny or 2 to reverse the stock direction instead of a minimum of 6.25 cents (a 16th) it seems to move several hundred with no appreciable index movement. A lot less money can move the tick around.
  4. nitro



  5. Your statement is confusing to me. If it takes less money to move the $TICK, then for appreciable index movement to occur, wouldn't the $TICK have to move more to get the index to respond? If this is the case, then the $TICK is just as effective as it always was but because of decimalization you see the change or difference in $TICK much more quickly than when 1/16th was the smallest increment. Anybody else have an opinion?

  6. It seems logical that pennies would cause TICK to be more erratic, but honestly I can't say that I see this actually happening. I do think it is somewhat easier to get extreme readings than it used to be, but I haven't tried to quantify this.
  7. I actually did a test about 5 months ago about the correlation between $TICK and ES.

    I think it was something like 48 - 56%.

    Can anyone confirm this...

    Anyways... before you go into market sentiments... you need to know or feel the market flow.... then these indications become valid...

    Just my 2 cents...
  8. lmt


    My point is that less money moves the tick, therefore additional money pouring in isn't reflected in the indicator. It has become hard to tell whether a move is real or not strictly by the tick reading.
  9. Thanks for the clarification. I haven't ever looked at the tick in isolation, so can't speak to your assertion directly. AAA has mentioned he has noticed greater volatility in the tick indicator. Perhaps, this is a result of decimalization. Gann spoke of a roughly 50% correlation between the indicator and the market, so, maybe the tick is not a very good stand alone indicator of market action.

    #10     Jul 13, 2003