Prem, Tick, Trin, Vix, Etc.

I have read somewhere, here or elsewhere, that a good trading strategy (short term) is to never go long when the tick is negative and vice versa.

Now, trading QQQ for instance, I suppose I should be interested in the Nasdaq tick (TIKQ on Tradestation). However, compared to the the Dow tick, it has been much lower most the time, at least recently (in very negative territory all day today so far, while the Dow tick has been above 0 several times).

If I would apply the "good trading strategy" above, with the Nasdaq tick, I would never had gone long today, and by that have missed the nice run from 11:00 to 12:30.

Maybe I misunderstood the "trading strategy"? Please, anyone who could fill me in on this?
 
Originally posted by granville x
I have read somewhere, here or elsewhere, that a good trading strategy (short term) is to never go long when the tick is negative and vice versa.
More...

Well, there's never truly a "never" in trading. And this is one of them. There are times when the TICK can go to extremes and that MAY indicate a reversal is coming. This usually occurs when the tick is + or - 1000.

And today was a CLASSIC example. That extreme was hit and BOING, you get a nice bounce.
 
Thanks for your reply Cashonly!

However, I'm still wondering about this "strategy". Not going long whenever the tick is negative and vice versa.

Also, trading the QQQ, should I perhaps be better off locking at the Dow tick? Is this the preferred tick to look at for most traders (and if so, the one with the most significance)?
 
Originally posted by granville x
Also, trading the QQQ, should I perhaps be better off locking at the Dow tick? Is this the preferred tick to look at for most traders (and if so, the one with the most significance)?
More...

I don't trade the QQQ, so I can't answer about that. However the NYSE tick (I think that's what you're calling the DOW tick, but it tracks more than the DOW), is the one that the traders I know use. But, it may be different for the QQQ or NASDAQ stocks.
 
sounds like it depends on whether you are a trend follower or a contrarian. If you are a contrarian you look for extremes and bet against them, if you are a trend follower then you just go in the direction of the indicators.
 
Originally posted by cashonly


Well, there's never truly a "never" in trading. And this is one of them. There are times when the TICK can go to extremes and that MAY indicate a reversal is coming. This usually occurs when the tick is + or - 1000.

And today was a CLASSIC example. That extreme was hit and BOING, you get a nice bounce.
More...

And now look, we've been going down steadily all afternoon, but never hit more than -900 on the TICK, so the basic idea has merit.
 
granville x
I always watch both. Although I am usually playing the Nas I will watch NYSE Tick also and like the odds when both confirm the same trend. I look to see if the tick trend is increasing or decreasing. In the current market we have had alot of days when the two Ticks ignore each other but they often trend the same direction. If I am long the NAS and the Nas TICK is falling but I see the NYSE tick rising I might stay in the trade for a while longer and see if the Nas starts to climb. If they are both falling I am gone. I wish I could create a basket of stocks and have a tick chart on that basket. Sometimes I am short the QQQ and the NAS Tick is dropping but the the q's are rising. Some heavy weight in the 100 is trending up heavy and is holding uo the Qs. If I had my basket Tick I would have a More precise picture of what is happening. I find That when I am trading futures The tick lags a bit and I have to pay more attention to time and sales on the future itself. Although I don't trade just off the Tick I would be lost without it. :)
 
Originally posted by nasdaqmadness
... I wish I could create a basket of stocks and have a tick chart on that basket.
More...

That is possible. What quote software do you use?
 
TIKQ is a defunct indicator now. It's important to realize this. Remember that due to the change to decimal system, data is no longer changed at 1/8 or 1/16 or 1/32. Thus many players are willing to play "unfair" and create "odd" ticks that are 0.01 above or below previous price.

That can never happen to NYSE data - because only best bid/ask get executed. But for NASDAQ, its TICKQ index is pretty much broken now.

Even if you trade the "4-letters" like I do -- you need to use NYSE TICK.





Originally posted by granville x
I have read somewhere, here or elsewhere, that a good trading strategy (short term) is to never go long when the tick is negative and vice versa.

Now, trading QQQ for instance, I suppose I should be interested in the Nasdaq tick (TIKQ on Tradestation). However, compared to the the Dow tick, it has been much lower most the time, at least recently (in very negative territory all day today so far, while the Dow tick has been above 0 several times).

If I would apply the "good trading strategy" above, with the Nasdaq tick, I would never had gone long today, and by that have missed the nice run from 11:00 to 12:30.

Maybe I misunderstood the "trading strategy"? Please, anyone who could fill me in on this?
More...
 
It seems no one actually state how to use them to trade so far :D

Here it goes,

1. they are both non-range bounded MOMENTUM indicators

- some other non-range bounded MOMENTUM indicators are MACD, CCI, etc.

- MOMENTUM new high leads price new high, and vice versa for new lows, on a swing basis

- MOMENTUM divergence - as tick and prem are collected on very low timeframe, using them in small time window (less than 5 to 10 mins) do not work well. Spot the ones than span about 20 to 45 mins. For time window > 2 to 3 hours, the memory effect is lost.

2. Accurate data is needed

- make sure your data feed does not broadcast less frequently than what the exchange is sending. TICK is broadcasted on a timer basis and PREM should be tick by tick at least comparing to the future counterpart.

Should be enough pointers for newbies to study them seriously.
 
You must log in or register to reply here.
Back
Top