Friday, February 8, 2008

Day Trader The Trin, the Ticks and the Tiki

The Trin, Ticks, and Tiki are known as market internals, because they provide information about what is happening inside the markets. For example, the Ticks shows at a glance how many stocks are increasing in price and how many are decreasing in price at any given moment. The Trin, Ticks, and Tiki are not really indicators (in the sense of the MACD or the DMI), but they can be used as indicators when day trading.

Many beginning day traders are unaware that the Trin, Ticks, and Tiki exist, and many experienced day traders do not know how to use them to their full potential. The following articles will explain what these market internals are, the information that they provide, and give a brief overview of how they can be used in day trading :
The Ticks is not really an indicator (in the sense of moving averages), but it can be used as an indicator when day trading. The Ticks is one of three market internals, with the Trin and Tiki being the other two. The Ticks compares the number of upticking (price increasing) and downticking (price decreasing) stocks on the NYSE (New York Stock Exchange), and calculates a ratio showing whether there are more upticking or downticking stocks.

The Ticks is based upon the stocks that are traded on the NYSE, so it is primarily (actually almost exclusively) used as an indicator for the US markets, but the same principles and formulae can be applied to the European and Asian markets.

The Trin is not really an indicator (in the sense of moving averages), but it can be used as an indicator when day trading. The Trin is one of the market internals, with the Ticks and Tiki being the other two. The Trin compares the volume of the advancing and declining stocks on the NYSE (New York Stock Exchange), and calculates a ratio showing which stocks (advancing or declining) have more volume.

Calculation

* Description : The Ticks (T) is a comparison of the number of upticking and downticking stocks.
* Calculation :
T = Upticking Stocks - Downticking Stocks

Trading Use

The Ticks shows whether there are more individual stocks with increasing prices or decreasing prices, so it provides a detailed overview (detailed because it uses the individual stocks, and overview because it calculates a single value) of the sentiment of the markets.

As the Ticks can be displayed as a bar chart, it can be interpreted like a price bar chart, using concepts such as support and resistance and trend lines. The Ticks can be used independently, or as part of a larger trading system.

The Trin is based upon the stocks that are traded on the NYSE, so it is primarily (actually almost exclusively) used as an indicator for the US markets, but the same principles and formulae can be applied to the European and Asian markets.

Calculation

* Description : The Trin (T) is a comparison of the volume (V) being traded for advancing and declining stocks (AD).
* Calculation :
AD = Advancing Stocks / Declining Stocks
V = Buying Volume / Selling Volume

T = AD / V

Trading Use

The Trin shows where the volume is within the market. If there is more volume for the advancing stocks, the Trin will be below 1, and if there is more volume for the declining stocks, the Trin will be above 1. As the Trin can be displayed as a bar chart, it can be interpreted like a price bar chart, using concepts such as support and resistance and trend lines. The Trin can be used independently, or as part of a larger trading system.

The Tiki is not really an indicator (in the sense of moving averages), but it can be used as an indicator when day trading. The Tiki is one of three market internals, with the Trin and Ticks being the other two. The Tiki compares the number of upticking (price increasing) and downticking (price decreasing) stocks in the Dow Jones Stock Index, and calculates a ratio showing whether there are more upticking or downticking stocks.

The Tiki is based upon the stocks that are included in the Dow Jones Stock Index, so it is primarily (actually almost exclusively) used as an indicator for the US markets, but the same principles and formulae can be applied to the European and Asian markets.

The Tiki can be displayed as a single line, or as a bar chart, but it is always displayed on its own chart, separate from the price bars.
Calculation

* Description : The Tiki (T) is a comparison of the number of upticking and downticking stocks.
* Calculation :
T = Upticking Stocks - Downticking Stocks

Note that the calculation of the Tiki is exactly the same as the Ticks, so the only difference is that the Ticks includes all of the stocks that are traded on the NYSE, but the Tiki only includes the stocks that are part of the Dow Jones Stock Index.
Trading Use

The Tiki shows whether there are more individual stocks with increasing prices or decreasing prices, so it provides a detailed overview (detailed because it uses the individual stocks, and overview because it calculates a single value) of the sentiment of the markets.

As the Tiki includes less stocks than the Ticks, it reacts faster than the Ticks, and will often signal something interesting before the Ticks. As the Ticks can be displayed as a bar chart, it can be interpreted like a price bar chart, using concepts such as support and resistance and trend lines. The Ticks can be used independently, or as part of a larger trading system.

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