VIX and TICK - how to use and for what ?

Discussion in 'Strategy Development' started by richk, Sep 10, 2002.

  1. richk



    I read several info about VIX and TICK indicators , but I never heard about any trading strategy using these indicators.
    I am daytrader - are TICK and VIX usable for daytrading ?
    Can somebody explain how they can be used ?

    Thank you.
  2. Watching TICK helps me to know where extremes will occurr and a place to fade the direction. For exemple if the market gaps up in the morning and TICK starts moving up. I will usually prepare to short the up gap when I see TICK is approaching +800-+1000 range. I always like to think of quick directional moves like a stretched rubber band. When things move in one direction and TICK is stretched toward extremes, it's usually one indicator to fade the move. I must admit that I don't use VIX very much, but I notice where it is each day and make a mental note of the value.

    All the best,
  3. silk


    What i've noticed about the vix is on days when it is making a crazy move, like last tuesday it was up like 5 points, stay with the down trend as there won't likely be a reversal that day.

    Just one more thing to keep in the back of your mind.
  4. zxcv1fu


    Pristine use them for tradings. Maybe you can attend their free seminar to find out.
  5. Most people believe that watching the tick for extremes is helpful for quick scalps and + or - 1000 seems to be number people use. It's also the one that's written about the most. Just remember a tick of + or - 1000 doesn't mean the trend will change. It may change, or just stall and then continue smoking in the same direction leaving good traders scratching their heads. Ticks of 1100 up to 1400 aren't to uncommon anymore.
  6. syst


  7. biggs_17


    Can anyone tell me where I can find ela code to generate volume profile on intra day basis.
    I understand market profile is similar.

    Does anyone trade the SnP intra day using this information?
  8. Sorry, that's not true. TICKs over pm 1200 are very rare, in that they do not happen everyday, may happen once a week or so. TICKs close to 1000 are not so uncommon indeed, you may expect them every day. The more volatile the market, bigger swings, the more likely you are to get bigger absolute values of TICK.

    But I agree that pm 1000 does not mean a trend change, but it may mean in a smaller time frame. You can get 2-3 ES points out of that, but again not always, it's important to watch the average TICK direction too.
  9. You should watch the VIX on a daily chart and note that the VIX is a measure of expected volatility in equities derived from activity in OEX options bid/ask.

    A rising VIX tends to correlate with fear, and a descending VIX tends to correlate with complacency. The VIX is mean reverting, reflecting mean reversion in the market. When the VIX gets very stretched from a short term moving averaqe, then it usually reverts. In other words, it can be used as a contrarian indicator to anticipate bias. VIX extremes,like in July and October, coincided with intermediate term bottoms. It is a derivative sentiment indicator.

    Today's closing VIX is stretched down, and is at multi month lows.
    It has descended as the rally has continued. But it is now signaling a possible reversal, however it still did not reverse direction on a closing basis.

    It won't help you directly with daytrading and scalping but it will help by being a component in whatever you use to determine a bias for the day. If the market sells down Monday, and sells hard,
    you will see the VIX rise at least a few points, as people will get worried the rally is reversing, and institutions will be hedging their positions with options strategies.
  10. In Street Smarts Linda R. gives an intraday tick trade. Basically when the tick doesnt confirm a new hi or low at least 90 minutes apart, when the tick retraces 100 pts. you enter. She says you can make a living with this trade. I have not had the patience to test it. For exact details you should consult the book.
    #10     Nov 22, 2002