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Using the NYSE TICK and TRIN Indicators for Day Trading

Tonight I am going to discuss how to go about using the NYSE TICK and Trin indicators in your day trading.

As these are primarily intraday indicators, the best use for them is by day traders and scalpers in general.
In my own trading the TICK and Trin are probably the two most important indicators that I use to get a handle on the market.
They give a very clear indication of the markets breadth and general sentiment.
Generally they just let you see what is going on, what the flow is.
[18:05] I will start with the TICK
[18:05] on most trading platforms you can pull this indicator up with $TICK or $TICK-N
[18:06] I'm of the opinion that the TICK is one of the most reliable indicators available to an intraday day trader.
[18:06] The TICK is a very simple indicator measuring the number of Nyse stocks currently trading on an uptick vs those trading on a downtick.
[18:07] An uptick occurs when the prior sale in a stock is below the price of the current sale.
[18:07] A downtick occurs when the the prior sale in a stock is higher then then current sale.
[18:07] There are several ways that I go about using the TICK.
[18:08] The most basic idea with it though is to get a good gauge of the overall market breadth and sentiment.
[18:08] It provides a very nice snapshop view of who is in control in the battle between the Bulls and the Bears.
[18:09] When I look at the TICK indicator, the first thing that I look at is the overall trend, that is to say is it uptrending or downtrending?
[18:10] When the TICK is uptrending then I assume the bulls are in control and my bias is long.
[18:10] (btw, I look at the TICK on a 5 minute line chart)
[18:10] When the overall trend in the TICK is down then I assume that that the bears are generally in control and my bias is generally to go short.
[18:11] You can also look at the TICK and get a general idea of if things are dull or hopping, heating up or cooling down.
[18:11] If you look at the TICK and find that its pretty much in a range between +300 and -300
[18:12] Then your basically dealing with a pretty flat, range bound dull market.
[18:12] The kind that should be giving you sore hands, but unfortunately for many day traders leads to diminished bank accounts.
[18:12] Also its important to see which side of the zero line the TICK is mostly playing on.
[18:13] If when its staying above it and every time it comes down to zero there is a bounce, then even in a range bound situation there is likely some underlying strength.
[18:13] Reverse is also true.
[18:14] When you are dealing with a strong market you want to see that in general you are getting higher highs on surges in the TICK
[18:14] When you are dealing with a weak market then you want to see that in general you are getting lower highs on surges down in the TICK.
[18:14] This shows you that the momentum is continuing to build in the market
[18:14] and its being shown to you in the TICKs
[18:14] you can continue to be comfortable playing continuation patterns in the direction of the overall trend.
[18:15] When things start to slow down under the surface in the market, then you are likely to not see this
[18:15] meaning that as the TICKs rally, they will not continue to make a higher high
[18:15] even if overall they are still positive
[18:16] if they start to not be able to take out the last high on the surges
[18:16] then momentum is fading
[18:16] Very aggressive day traders can look for short entries.
[18:16] But even if you do not do this, you should start to be very cautious of the continuation patterns (i.e. flags)
[18:16] <Brandon> Next when the stock market is making new highs or new lows
[18:17] <Brandon> you definitely want to see this is also the case with the TICK
[18:17] <Brandon> if its not, the same goes as above.
[18:17] <Brandon> It is a strong warning to you that overall momentum is fading in that direction, and you should be extra cautious of the trend.
[18:17] <Brandon> Another use of the TICK is to identify market extremes.
[18:18] <Brandon> As a generic blanket statement people always say +/- 1000 is extreme
[18:18] <Brandon> This is a very generic statement
[18:18] <Brandon> and leads to a lot of people getting hurt because people say well sell +1000 TICKs
[18:18] <Brandon> so people sell them short with out looking at anything else.
[18:19] <Brandon> the problem is that overbought markets often get more overbought
[18:19] <Brandon> and oversold becomes more oversold
[18:19] <Brandon> but even bigger then that is that 1000 does not always apply
[18:19] <Brandon> if you are dealing with an extremely strong bear market swing for example
[18:19] <Brandon> a +400 in the TICK (basically anything outside of neutral) can very easily be an overbought situation in the market
[18:20] <Brandon> while you may not become oversold until you get down to -1200/1300 area
[18:20] <Brandon> or if you are dealing with a very strong bull swing
[18:20] <Brandon> then you might not see overbought until between +1200/1300
[18:21] <Brandon> and TICK readings anything under -400 might be oversold
[18:21] <Brandon> so its important to always take into account the current market situation
[18:22] <Brandon> Finally I like to pay attention to the levels the TICK reaches in the first 20/30 minutes of the Day
[18:22] <Brandon> esp if there is a gap
[18:22] <Brandon> if we get a gap up, I treat a +500 or better tick reading as confirmation of this gap
[18:22] <Brandon> if we do not get over that +500 then I will short the weaker participating stocks
[18:23] <Brandon> and look for the first opportunity to short the indexes
[18:23] <Brandon> reverse this for the gaps down
[18:23] <Brandon> Finally I look at the daily range
[18:23] <Brandon> and just want to know what the high and low where (then see if they are taken out the next day)
[18:23] <Brandon> as well as the # on the range and if it is an NR7 or WR7
[18:24] <Brandon> This tells me if the market is coiled or expanded
[18:24] <Brandon> I am going to open the room up now for questions about this section.
[18:24] <Brandon> Then we will move on to the TRIN
[18:25] <Brandon> Room is open, go ahead with any questions you have.
[18:25] <Brandon> anyone?
[18:25] <makityrs> seems pretty cut and dried
[18:26] <Brandon> ok
[18:26] <dalau> sounds like 20 min min is the wait period to get a good read of TICKS
[18:26] <Brandon> seems as though I did an excellent job and there are none
[18:26] <_jaw> isn't it possible that with lower volume (like today), that the moves could be more volatile ? I think this affects the trin more though ?
[18:26] <Brandon> not so much because it just measures the last trade
[18:26] <Brandon> and things always trade
[18:26] <Brandon> it can have a very minor effect on the TRIN
[18:26] <_tung> Will you post the log in some web URL link???
[18:26] <Brandon> but not that much
[18:26] <Brandon> yes tung
[18:27] <Brandon> Now I will discuss the Nyse TRIN, also known as the Arms (after Dick Arms) Index.
[18:27] <Brandon> The formula for the TRIN is
[18:28] <Brandon> Advancing issues/Advancing Volume
[18:28] <Brandon> ----------------------------------------------------
[18:28] <Brandon> Declining issues/Declining volume.
[18:28] <Brandon> This equals TRIN
[18:28] <Brandon> The TRIN is another indicator that I find to be invaluable to me on an intraday basis.
[18:29] <Brandon> When I look at the I am primarily concerned with its overall trend.
[18:29] <Brandon> A rising Trin is bearish on a short term basis.
[18:29] <Brandon> In this situation risk will be higher for longs and I generally favor the short side of the market.
[18:30] <Brandon> A declining Trin is short term bullish. Risk will be higher for shorts, and in this situation I generally favor the long trades.
[18:31] <Brandon> The Nyse Trin also gives you a good handle on the markets overall ""health""
[18:31] <Brandon> A few general points.
[18:31] <Brandon> A Trin reading below 1.0 is ""healthy"" i.e. the bias is up.
[18:31] <Brandon> A Trin reading above 1.0 is ""sickly"" and the bias is down.
[18:32] <Brandon> In general a range between 0.75 and 1.25 is flat or neutral.
[18:32] <Brandon> The Extreme points to watch in the Trin are around 0.30 which shows euphoric buying and a possible top.
[18:33] <Brandon> And then readings above 2.0 which suggests excessive doom and gloom and the possibility of a short term bottom.
[18:33] <Brandon> I have found that the extremes on the TRIN can get pretty extreme though
[18:33] <Brandon> and this is not the best way to use it
[18:33] <Brandon> I have seen TRIN readings of 9.0
[18:33] <Brandon> and I've seen them of .16
[18:33] <Brandon> and the market kept going
[18:34] <Brandon> so the most important thing with the TRIN in my opinion is the overall trend
[18:34] <Brandon> as you go into the afternoon you want to pay attention to the level on the TRIN
[18:34] <Brandon> if the TRIN has spent all day trading under .50
[18:34] <Brandon> in most cases you will see extremely strong buying into the close
[18:34] <Brandon> probably 4 out of 5 times
[18:34] <Brandon> there is no real corresponding number on the high Trin though.
[18:35] <Brandon> so, this pretty much wraps up the Trin
[18:35] <Brandon> I will go ahead and again open up the room for any discussion you may have.
[18:35] <Brandon> #Class is unmoderated.
[18:35] <shoeless> Just a note for beginners
[18:35] <esjim> do you use trin q or trin n?
[18:35] <Brandon> in all cases I use the NYSE indicators
[18:36] <shoeless> I have found that a little typed not on the monitor with these values and what they mean is helpful
[18:36] <_jaw> do you also look at the Naz tick and trin / and why the line chart over candles ? thanx... nice lesson
[18:36] <shoeless> not=note
[18:36] <Brandon> most of the programs are attached to the NYSE
[18:36] <Brandon> and that has an extremely important influence on the market
[18:36] <shoeless> but don't get hung up on the actual values watch the trend as B said
[18:36] <Brandon> I use the line chart because sometimes the TICK and TRIN can both get very sloppy
[18:36] <_rswarrick> where do we find trin?
[18:36] <Brandon> so there will be ""tails"" on a regular chart that will distort the reading
[18:36] <Brandon> the line charts give a much better feel for the trend
[18:37] <Brandon> the intraday for the Trin is $Trin-n or $Trin depending on your platform
[18:37] <Brandon> For realtick it is $TRIN-N
[18:37] <_rswarrick> tks
[18:37] <_rswarrick> if you are using tradestation?
[18:38] <Brandon> should be $trin
[18:38] <shoeless> B you use 5 min on the TRIN as well correct?
[18:38] <Brandon> yes
[18:38] <django> Do you look at previous days reading in TRIN and TICK for relative trend
[18:39] <_jaw> in those rare instances when the market is divergent between the naz and NY would you still give the same weight to market direction for both
[18:39] <Brandon> yes
[18:39] <Brandon> but in those instances I tend to just stand aside and not be trading :)
[18:39] <_jaw> good advice / thanks
[18:41] <shoeless> So B you mentioned if TRIN is all day under .5 we'll most times see buying toward close
[18:41] <Brandon> most of the time
[18:41] <shoeless> Is there an alternative value on the down side
[18:41] <Brandon> not sometimes
[18:41] <Brandon> nope
[18:41] <shoeless> I think you already said no
[18:41] <woodman> how do you sort out divergences between tick and trin????
[18:41] <shoeless> just wanted to clarify ty
[18:41] <Brandon> I generally go with the TRIN
[18:43] <shoeless> Thanks B nice class I have to head out
[18:43] <Brandon> nite
[18:43] <woodman> wow, well said and to the point, thanks for the great notes
[18:43] <Brandon> thanks woodman
[18:44] <dana> great class, I will start looking for these things tomorrow. good nite.
[18:47] <Brandon> good night everyone
[18:47] <Brandon> I will see you all in the morning
[18:47] <esjim> tks B nice class
[18:47] <ralph> thanks B


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