Billy, I've got a question about cumulative TICK.
Is it fair to say that this indicator is more trending and less choppy then actual price ?
It seems that way, but stockcharts doesn't have enough historical intraday data to say for sure.
How long have you been using this tool ?
Rembert,Originally Posted by Rembert
I’ve been using this tool as far back as I can remember, but it became very reliable around 2007, coincidentally with the rise of HFT. I intensified my use of it after reading blog posts by Dr. Steenbarger (Traderfeed.com) and Rennie Yang (Markettells.com) among others who also used it to monitor program trading. But they only looked at intraday cumulative TICK within a one-day window. Being more of a trend-follower, I started to watch multi-days windows and the half-day, full-day and 10 hour moving averages came naturally as the best trending indicators. I introduced my findings sometimes around end of 2008 in the old VIT group. But it was just one indicator among others until I realized that all my worst discretionary trades were entered against the cumulative TICK trend. Today, it is almost the only indicator that I check before entering any discretionary index ETF trade. Even if my multi-pivot setup is perfect, I’ll only enter if the HFT programs – or cumulative TICK- are on my side. And I tend to exit as soon as I see the cumulative TICK reverse its trend. The performance improvement has been amazing.
So, you are right, this indicator is more trending and less choppy than actual price. Its main drawback is that it can easily be distorted by large opening gaps, but you quickly get used to adjust mentally for the gaps.
As I write, cumulative TICK is testing the half-day average, so I quickly go back to monitor potential discretionary entries.
Billy
Thanks Billy. Another usefull tool to add to my trading arsenal. It's a bit like VWAP. At first everybody used it only for intraday trading until some people noticed it is also usefull on a longer timeframe.
It is even more powerful than VWAP at times of record high correlation among all stocks like now.
Today's development is very interesting and important on this IWM pullback while cum TICK is testing now the full-day average, holding above the half-day, and making a positive divergence with price.
Price itself is holding above intraday VWAP. This could be the first clues that a double bottom has been successfully tested. If only we had a RT 20 DMF to see what large players are doing RT!!!
Billy
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