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TICK and PREM
- Thread starter richk
- Start date
Originally posted by richk
Hello,
can somebody describe more TICK and PREM indicators and how they can be use in trading (daytrading and/or swingtrading) ?
Who and how is using htem ?
Thank you .
Ticks simply reflect the net "up" ticks and "down" ticks at any one point of time. Generally a -1000 net ticks reflects a turnaround buy opportunity (like yesterday) ..meaning over sold.
Prem is the amount the S&P futures are trading above or below Fair Value at that exact time. This is fundemental to entering or exiting trades...you don't want to buy anything with a negative Prem number. Place a box next to your standard SPOO tick chart to reflect this number.
Don
Well Don, some of it depends on what your trading, cash or futures. When trading the S&P Emini I'd have to say that in an established downtrend one would not want to buy when the Prem is negative, unless one is covering on weakness, or after a major extension to the downside. However, in and uptrend, a negative Prem signals a pull back (not necessarily a reversal although at extremes it can be) and can often be a conservative longside entry. The Prem rarely stays negative for long, never gridlocks negative...it oscilates....and usually has a consistent range (and best a micro trend within the range.) I wrote a little about this last week. Now, if youre trading cash stocks, it may seem counter-intuitive to buy during a negative prem, until the spread Arbs sell the futures (during a high +Prem) and buy the cash. But, by that time, the meat of the move is past, since cash does tend to move up right along with a rising futures market, in an uptrend at least (unless the futures are fading cash selling.)
Perhaps you meant to say don't buy while the Prem is waning "going negative" i.e. oscilating back down from positve to the negative end of its range. Here I agree its best not intervene negatively, dont buy a falling market, let it bottom and turn before entering long. Are there other considerations that effect trading the cash stock market, from your experience, that Im failing to observe?--Peterg
Perhaps you meant to say don't buy while the Prem is waning "going negative" i.e. oscilating back down from positve to the negative end of its range. Here I agree its best not intervene negatively, dont buy a falling market, let it bottom and turn before entering long. Are there other considerations that effect trading the cash stock market, from your experience, that Im failing to observe?--Peterg
Originally posted by gotrader
Well Don, some of it depends on what your trading, cash or futures. When trading the S&P Emini I'd have to say that in an established downtrend one would not want to buy when the Prem is negative, unless one is covering on weakness, or after a major extension to the downside. However, in and uptrend, a negative Prem signals a pull back (not necessarily a reversal although at extremes it can be) and can often be a conservative longside entry. The Prem rarely stays negative for long, never gridlocks negative...it oscilates....and usually has a consistent range (and best a micro trend within the range.) I wrote a little about this last week. Now, if youre trading cash stocks,
it may seem counter-intuitive to buy during a negative prem, until the spread Arbs sell the futures (during a high +Prem) and buy the cash. But, by that time, the meat of the move is past, since cash does tend to move up right along with a rising futures market, in an uptrend at least (unless the futures are fading cash selling.)
Perhaps you meant to say don't buy while the Prem is waning "going negative" i.e. oscilating back down from positve to the negative end of its range. Here I agree its best not intervene negatively, dont buy a falling market, let it bottom and turn before entering long. Are there other considerations that effect trading the cash stock market, from your experience, that Im failing to observe?--Peterg
We're talking the stocks here, using the S&Ps as a leading indicator, not a trading vehicle. Your points are well taken for futures.
Don
Originally posted by richk
Hello,
can somebody describe more TICK and PREM indicators and how they can be use in trading (daytrading and/or swingtrading) ?
Who and how is using htem ?
Thank you .
Not really useful for stock daytrading. These general market measurements do not track with a high degree of reliability, the sector to which your stocks belong. PREM is useful in the morning, to indicate a spread between cash-futures and overnight futures (in general the SP500). TICK represents the NYSE combined indications. you also have customized TICK/TIKI/TIKN and so forth for the other markets.
Whether we accept it or not, stocks are grouped into baskets and traded as such by the Hedge, Mutuals and Specialty trading houses. Some of these basket contents are the best kept secrets of Wall Street. Some are as public as the QQQ components. Nonetheless, getting and indice that's customized towards that sector would serve you better in the immediate, in the short run, and in the mid-run.
NWX, SOX, and SMH help track the SemiConductors within the Networking/Software sector. Hence if you're trading HighTech then track these to see which provides a higer correlation and predictor/follower indication.
start with this concept and see where it takes you, of course, the secretary will disavow any knowledge
Originally posted by Don Bright
Prem is the amount the S&P futures are trading above or below Fair Value at that exact time.
Don
Followup to prior post. Maybe that's the issue then. I thought $PREM was the difference between the futures and cash, and not futures and fair value.
www.programtrading.com defines prem as I did, but if it's relative to FV, that would explain some of it.Todays FV is 0.95
Originally posted by vikana
Does anyone know how this work with esignal. I've never been able to make any sense of their $PREM.
Here is an example from a few minutes ago:
SPX=900.94
ES = 902.25
(difference = 1.31)
$PREM = 103
What gives ?
They're probably using a Fair Value number in the equation (not what we use, however).
SPX = 900.94
FV added = .28
Total = 901.22
E's = 902.25
Prem = 1.03 to FV..
Today's FV is .96 (we use the number from www.programtrading.com)
Don
Don,
Adding back the FV could explain why some of these numbers differ so much. Never occurred to me that anyone would do that.
While we're at it, could you explain the CNBC "fair value" number they give out?
I'd advise everyone to make sure you understand what your quote provider is giving you. I have found major differences in such things as TICK and TRIN between various services, enough to make trading systems not work.
Adding back the FV could explain why some of these numbers differ so much. Never occurred to me that anyone would do that.
While we're at it, could you explain the CNBC "fair value" number they give out?
I'd advise everyone to make sure you understand what your quote provider is giving you. I have found major differences in such things as TICK and TRIN between various services, enough to make trading systems not work.
Originally posted by AAAintheBeltway
Don,
Adding back the FV could explain why some of these numbers differ so much. Never occurred to me that anyone would do that.
While we're at it, could you explain the CNBC "fair value" number they give out?
I'd advise everyone to make sure you understand what your quote provider is giving you. I have found major differences in such things as TICK and TRIN between various services, enough to make trading systems not work.
What CNBC does is simply tell you how far away the S&Ps are from Fair Value (based on the measurement).
SPX 890.00
FV .96
FV S&P 890.96
S&P actual 888.00
2.96 under FV.
Don