The NYSE Tick – Why It Is Important To The Short Term Trader
Day traders and quick draw micro scalp traders all know the value and usefulness of the NYSE TICK when determining the short term direction and mood of the market. Used specifically as a barometer, a quick glance at the TICK can reveal very important information since it is generally utilized to gauge the market as a whole, rather than individual stocks or futures contracts.
When the market is bullish the TICK will reveal that more stocks are ticking up rather than down. For example: When the TICK reads plus 300, it is telling the trader that 300 more stocks are moving up, or up ticking than down ticking, which is obviously a bullish indication of the overall market. In contrast when the TICK is minus 300, the trader knows sellers are dominate and entering a long position is not a wise choice.
The TICK will at time exhibit extreme market conditions when it registers a reading over the 1000 point, both plus and minus. When the TICK approaches the plus 1000 mark, the market is considered to be severely overbought and a pull back is highly possible as bulls take profits.
Although the plus 1000 threshold is generally considered to be overbought territory, it does not mean the current upward trend has been terminated. In fact, odds favor that the market may continue higher once a re-tracement to recent minor support has been touched with the market bouncing and again continuing it’s trend upward. The opposite is also true when the market is downward trending and the TICK reaches extreme oversold conditions at the minus 1000 mark.
By placing the NYSE TICK on your trading platform screen, you will have an added tool that can enhance your ability to stay on the right side of the trade and follow the prevailing trend of the current market. Profitability is the goal and by utilizing proven tools, we can improve our trading ratios.