Here’s a Quick Way to Stop Chasing trades
What Everybody Ought to Know About The NYSE TICK Index.NYSE TICK Index and Tick Charts It’s very important that you know the difference between the two. Some people tend to confuse the two and for good reason, as they have the same name. A tick chart is a chart that will plot the number of ticks per bar either via a bar chart or Japanese Candlestick chart. The same way that a 2 minute chart will plot the price action in bars of time.
This is the definition of a Tick chart: The minimum upward or downward movement in the price of a security or future.The term “tick” also refers to the change in the price of a security or future from trade to trade. Example: 233 tick chart means that each bar contains 233 ticks There is no way to match the time and ticks. You could have 1 tick in a 2 minute chart or You could have 500 ticks in a 2 minute chart.
The definition of the NYSE Tick Index: The number of stocks trading on an uptick minus the number of stocks trading on a downtick.That is just a real fancy way for saying it’s the RPM gauge of the market. Now that we have that out of the way we can talk about the….
3 best ways you can use the NYSE TICK Index.
Think of what would happen to your car’s engine if you just left it in park and stepped on the gas and held it to the floor. What would happen is the rpm would peg and the engine would overheat and could even blow up. Danger… Danger… Danger… Will RobinsonThe same thing happens in the markets and if you know what to look for you can take advantage of it. It will help you get better entries and exits in your trading. You will want to Add these levels to your NYSE TICK Index chart. First draw or place a horizontal lines at the following levels:
- +1200 NYSE Tick Index Reading
- +1000 NYSE Tick Index Reading
- +800 NYSE Tick Index Reading
- +600 NYSE Tick Index Reading
- 0 NYSE Tick Index Reading
- -600 NYSE Tick Index Reading
- -800 NYSE Tick Index Reading
- -1000 NYSE Tick Index Reading
- -1200 NYSE Tick Index Reading
The first trade is a NYSE TICK Index Extreme Fade.Lets’ define the word fade. Fade means go in the opposite direction or to go against. This means if it is a negative Tick extreme you would go long. Tick extreme fades have the potential to be very profitable if you know what you’re doing and if you time them right. First rule of tick extreme is you fade the first tick reading above or below +1000 or -1000. So for a -1000 Tick Index reading then you would go long. Next question you may have is “go long what”? That is a great question. This trade will work on any of the of the index futures like the Dow E-mini, S&P E-mini, Nasdaq E-mini or the Russell E-mini. It can also work on The ETF’s Like the DIA, SPY, or the QQQ. If you trade market related stocks like AAPL or GOOG or anything else that moves with the futures markets you can also use it for entries and exits on these types of stocks.
Have you ever heard the saying all ships rise with the tide.
If your stock is one of those that rise and fall with the broader market, this trading tactic will help you with entries and exits.But, I prefer to trade tick extreme fade on the Dow E-mini or S&P E-mini. I just think it is cleaner and quicker. It just works better on the Dow E-mini and S&P E-mini. When you do this trade it is important that you do not hesitate.Now there is nothing wrong with adding a filter or a confirmation, just don’t add a confirmation of a confirmation of a confirmation. Because by the time you do that, the trade will already be working and you will be getting into the trade too late and you will get stopped out. When you do this trade you will be afraid. You might even suffer from dear in headlights syndrome or fear of pulling the trigger. Please note that this is very natural. The fear that you will have is a good thing, as it will protect you. The reason you will have some fear is because you will be long into a strong down move and every fiber in your being will be trying to talk you out of doing this trade. You will get over it after you do the trade a few times.
One of the reasons this trade works so well is because…The Dow E-mini or S&P E-mini are not the best trending markets but they are great counter trend markets. Think of the Dow E-mini or S&P E-mini as sprinters. They run, stop, and reverse. Then run, stop, and reverse again. It’s on the reverse part that you get stopped out, and then they start the whole vicious cycle over again. So what is happening when a -1000 tick reading happens is that all the sellers have come into the market and there are no more sellers to sell at that time. In other words, they have shot all their bullets and are out and need to reload. That is where you come in and profit on the reload.
Stop placement and targetsI use a 15 tick stop loss and I front load it and scale out every 10 ticks. So for example, if I were to take this trade with 10 contracts it would look like this. 1. -1000 NYSE Tick Index Extreme 2. Long 10 Dow E-mini or S&P E-mini 3. Stop of 15 ticks from entry. 4. Sell ½ or 5 contracts once up at least 10 ticks 5. Move stop from -15 ticks from entry to -5 ticks from entry. 6. Sell ¼ or 3 contracts once up 20 ticks 7. Open target on last ¼ or 2 contracts Word of caution: not all chart vendors use the same calculation and some actually filter tick data. I use TradeStation. Your data provider may not match mine. So Think or Swim (TOS) and E-signal will have different values for the Tick Extremes. Special notes: Only do the 1st -1000 tick fade long and the first +1000 tick fade short only. Don’t fade the 2nd + or – tick fades. There is a better trade to do for repeat tick extremes that you will discover later. Example: -1000 long NYSE Tick Index Reading -1000 pass NYSE Tick Index Reading -1000 pass NYSE Tick Index Reading +1000 short NYSE Tick Index Reading Example -1000 long NYSE Tick Index Reading +1000 short NYSE Tick Index Reading -1000 pass NYSE Tick Index Reading +1000 pass NYSE Tick Index Reading Example: -1000 long NYSE Tick Index Reading +1000 short NYSE Tick Index Reading +1000 pass NYSE Tick Index Reading Oops… This article is getting a little long so I will cover the other two main ways to use the NYSE $Tick Index in a separate article or following post. Leave a Question or a Comment Below.