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BY CHRISTOPHER TERRY
T
FIGURE 1 TICK AND RESISTANCE
he TICK is a market breadth The TICK indicator moved into overbought territory as SPY tested its
indicator that measures the resistance zone. The combination of these signals set the stage for low-risk
difference between the short trades. The second short sale was also supported by the divergence
number of New York Stock that occurred between the higher price high and lower TICK high.
Exchange (NYSE) stocks trading on an
S&P 500 Index Trust (SPY), one-minute
uptick (i.e., last price higher than the Protective stop
previous price) and the number of stocks 108.80
Protective stop Go short
Short-term
trading on a downtick (last price lower 108.70 double top
than the previous price). 108.60
For example, if at a given moment Go short
108.50
5,200 NYSE stocks were trading up from
their previous prices and 4,800 were 108.40
trading down from their previous prices, 108.30
the TICK reading would be +400 (5,200-
108.20
4,800). The TICK indicator should not be
confused with the term “tick,“ which is 108.10
TICK basics
113.80
As these examples suggest, the TICK
TICK
indicator should be used to set up or 600.00
confirm a trade, not as a stand-alone 400.00
tool. By utilizing the TICK in conjunc- Overbought
200.00
tion with price patterns, technical indi-
.00
cators, and in the context of the overall
trend and market environment, you can -200.00
make better buy and sell decisions. Ý
9:33 9:40 9:47 9:54 10:01 10:08 10:15 10:22 10:29 10:36 10:43 10:50 10:57
For more information on the author see p. xx. Source: TradeStation Platform