T2W Trading Community

What is a TICK?
A TICK is the number of NYSE upticking stocks vs downticking stocks. If 1000 stocks are upticking and 600 stocks are downticking you will get a TICK reading of + 400.
 
The TICK is a useful market internal tool to gauge market sentiment, design trading strategies, to prevent one from chasing, etc...
 
Traders use the TICK in various ways: some choose to fade TICK extremes, others use it to confirm market direction, and others incorporate the TICK into their trading setups.
 
In this article, I want to go over some of the TICK strategies and methods I personally use in my trading.
 
TICK HOOK
Let's begin with a TICK hook. The difference between a candlestick TICK chart and a line on close TICK chart is the visual TICK hook. A TICK hook is shaped like a "V" or an inverted V similar to a "N". At times they may look like a "W" or a "M". A line on close TICK chart shows this visually. Take a look below:

The yellow arrows point out some examples of TICK hooks. I use TICK hooks to enter as well as to exit. An entry would be made when the TICK's make a "V" or "W" hook. An exit would be at an "N" or "M" hook. TICK hooks also help a trader from chasing the market and timing a pullback. Instead of entering when the TICK's are at the upper range, wait for a retrace on the TICK and enter on a hook.
 
TICK FADES
A TICK fade is a common strategy used by many traders. The key here is to understand which TICK hook to fade. If TICK's remain above the zero line, you do not want to be fading a TICK hook at the upper range. A TICK spending the majority of its time above zero indicates bullish internals. A TICK strategy in such an environment is to fade the lower TICK hooks. Below is an example of a TICK fade.

First thing you need to do is to wait for the TICK's to create a range. Once the TICK has placed its low and high, simply draw a horizontal line at both extremes. This the TICK range. Notice the two red horizontal lines on the chart above. Whenever the TICK's reach either side of the range, you fade the TICK. TICK fades are a little tricky at first to master. You need to create several rules in order to apply it to your trading strategies. For example, TICK fades on both sides work in a range bound market. In an up trending market you do not want to be fading a TICK hook at the upper range and vice versa in a down trending market. Play around with it and you will eventually start adding your own filters to TICK fades.
 
A second example is a TICK fade at an extreme reading. Traders will often fade extreme TICK readings of +1000, -1000, +1200, and -1200. I personally like to fade the extreme negative readings of -1000 and -1200. The markets will often bounce for a quick scalp. What about the positive extreme readings? I often find price to pullback and lift further after an extreme positive TICK reading. Take a look at the chart below.