sandpiper
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TICK TOCK
OK. I can do the basics... just about
.
Just in case there is any confusion. TICK is the net of all NYSE stock upticking versus those downticking. A lot of people confuse it for some kind of advance/decline measure but it's vitally important to remember that is isn't.
Now. There are about 3,200 NYSE stocks. So, in theory, TICK has a range of +3200 to -3200...... In practice TICK readings in excess of +1200 or below -1200 are extremely rare.
As China says, TICK is a measure of buying/selling intensity NOW. A figure of +300 means that 300 more NYSE stocks upticked last than downticked. This could be 600 upticks 300 downticks or some other combination. You don't know.
From a purely logical standpoint, there is no reason to connect the TICK reading now with the TICK reading 1 hour/1 day ago. Why, well for a start, the +900 TICK reading now may represent a substantially different set of stocks than the +900 reading we had 1 hour ago. Secondly, a +900 TICK reading now when the S&P cash is, say, +10 is different than the +900 reading we had when the cash was maybe -5, 1 hour ago.
Although TICK is "transient" you often see the same patterns forming in it as you see in the S&P cash or the e-mini. For example, it's quite common to see a congestion wedge in TICK forming at the same time as a wedge in the cash or the futures. In that case it does tell you that fewer and fewer stocks are ticking up/ticking down (although it doesn't even do that actually if you think about it), but you don't really need TICK to tell you that since you can see it in the price movement of the cash or the futures.
A common use for TICK is as a kind of entry filter. In my case, if I've identified an uptrend, or I want to go long on a breakout, I won't go long until TICK retreats or retraces to a value of 300 or less, i.e. I wouldn't go long with TICK at +900 or +1200. And vice versa. Ideally in this situation (i.e. an uptrend) you often get a retracement of TICK to 0 which is also a good point to consider going long. All of this applies in reverse if I want to go short.
Generally speaking, sustained periods of TICK readings greater than 0 are bullish and vice versa for sustained reading of less than 0. But, bearing in mind the transient nature of TICK you have to be careful with this one.
The other useful thing that TICK sometimes highlights (for me anyway) is buy and sell programs. Not always that easy to see just looking at TICK, but you can start to get an idea. That's kind of another area anyway so I don't want to go OT about it.
In order to develop any kind of confidence trading with TICK, you have to really understand what it is and what it isn't and crucially what it's limitations/weaknesses are. China has been through them at various points, but just for the record:
1) TICK measure buy/sell intensity of NYSE stocks NOW (all 4,200 of 'em)
2) We trade a future on a weighted cash index of 500 of the largest cap stocks.
It stands to reason then that any TICK reading reflects up/down ticks in a lot of additional stocks as well as the ones that underly the index that we are interested in. So, what happens if all the small cap stocks are ticking up, but the large cap are ticking down?. Well, in that case you would get a higher TICK reading in comparison with a lower S&P Cash/Futures price (a kind of divergence.... see Stoploss post from a couple of days ago).
I'll leave someone alse to summarise how you might identify and trade different types of TICK divergences (if they want to). But, as has been said, it's all there in the posts that Stoploss and China have put up previously.
hth a little bit.
Post should, of course, have read 3,200 NYSE issues (not 4,200), so I've edited it accordingly.
mombasa said:Hi Stoploss, China, Sandpiper,
Been printing and going thru this thread trying to figure out what u guys are talking about and failing miserably
Any chance of someone posting a summary on the basics of how u use TICK etc?
Any useful links or recommended books would be great.
Cheers
OK. I can do the basics... just about
.Just in case there is any confusion. TICK is the net of all NYSE stock upticking versus those downticking. A lot of people confuse it for some kind of advance/decline measure but it's vitally important to remember that is isn't.
Now. There are about 3,200 NYSE stocks. So, in theory, TICK has a range of +3200 to -3200.....
. In practice TICK readings in excess of +1200 or below -1200 are extremely rare.As China says, TICK is a measure of buying/selling intensity NOW. A figure of +300 means that 300 more NYSE stocks upticked last than downticked. This could be 600 upticks 300 downticks or some other combination. You don't know.
From a purely logical standpoint, there is no reason to connect the TICK reading now with the TICK reading 1 hour/1 day ago. Why, well for a start, the +900 TICK reading now may represent a substantially different set of stocks than the +900 reading we had 1 hour ago. Secondly, a +900 TICK reading now when the S&P cash is, say, +10 is different than the +900 reading we had when the cash was maybe -5, 1 hour ago.
Although TICK is "transient" you often see the same patterns forming in it as you see in the S&P cash or the e-mini. For example, it's quite common to see a congestion wedge in TICK forming at the same time as a wedge in the cash or the futures. In that case it does tell you that fewer and fewer stocks are ticking up/ticking down (although it doesn't even do that actually if you think about it), but you don't really need TICK to tell you that since you can see it in the price movement of the cash or the futures.
A common use for TICK is as a kind of entry filter. In my case, if I've identified an uptrend, or I want to go long on a breakout, I won't go long until TICK retreats or retraces to a value of 300 or less, i.e. I wouldn't go long with TICK at +900 or +1200. And vice versa. Ideally in this situation (i.e. an uptrend) you often get a retracement of TICK to 0 which is also a good point to consider going long. All of this applies in reverse if I want to go short.
Generally speaking, sustained periods of TICK readings greater than 0 are bullish and vice versa for sustained reading of less than 0. But, bearing in mind the transient nature of TICK you have to be careful with this one.
The other useful thing that TICK sometimes highlights (for me anyway) is buy and sell programs. Not always that easy to see just looking at TICK, but you can start to get an idea. That's kind of another area anyway so I don't want to go OT about it.
In order to develop any kind of confidence trading with TICK, you have to really understand what it is and what it isn't and crucially what it's limitations/weaknesses are. China has been through them at various points, but just for the record:
1) TICK measure buy/sell intensity of NYSE stocks NOW (all 4,200 of 'em)
2) We trade a future on a weighted cash index of 500 of the largest cap stocks.
It stands to reason then that any TICK reading reflects up/down ticks in a lot of additional stocks as well as the ones that underly the index that we are interested in. So, what happens if all the small cap stocks are ticking up, but the large cap are ticking down?. Well, in that case you would get a higher TICK reading in comparison with a lower S&P Cash/Futures price (a kind of divergence.... see Stoploss post from a couple of days ago).
I'll leave someone alse to summarise how you might identify and trade different types of TICK divergences (if they want to). But, as has been said, it's all there in the posts that Stoploss and China have put up previously.
hth a little bit.
Post should, of course, have read 3,200 NYSE issues (not 4,200), so I've edited it accordingly.
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