Market Internal Trading Terms

[Soultrader 12]

1. TICK - number of NYSE upticking stocks vs downticking stocks. If 1000 stocks are upticking and 600 stocks are downticking you will get a TICK reading of + 400. Extreme readings of -1200 and +1200 are rare and offer fading opportunties. More information can be found here.

 

2. TRIN - TRIN measures the relative rate at which volume is flowing into advancing or declining stocks on the New York Stock Exchange. The index is based on the underlying assumption that the overall direction of stock prices and the rate of volume are leading, short-term indicators for the stock market. Short tutorial on the TRIN can be found here.

 

3. Put call ratio - This is a ratio of the put options trades versus the number of call options traded. A high put call ratio indicates alot of shorts. A low put call ratio indicates alot of longs. A good contrary tool to use in trading. When the pc ratio is too high everyone is long and there is no one left to buy. Therefore look for short opportunties. When the pc ratio is too low everyone is short and there is no one left to sell. Therefore look for long opportunities.

The basic numbers I use are 0.6 and 1.0. A pc ratio over 1.0 indicates a market that is too bullish. A reading under 0.6 indicates a market that is too bearish. Keep in mind that during options expiration week, the pc ratio becomes distorted and it may not be as effective.

 

Equation: Volume of put option contracts / Volume of call option contracts

 

4. Premium - The spread between the futures and cash. For example, if the S&P futures is trading at 1500 and the S&P cash is at 1510, the premium is 10. This number is important because it can fall in the range of no programs, buy programs, or sell programs. My favorite site for premium information is Index Arb.

 

5. Tape: Also known as the Time and Sales. It prints the time, volume, and price of every trade that took place for a certain financial instrument. One of the hardest trading skill to master. The tape is useful in timing entry and exit points. Very useful for short-term trading.

[michaelstuarts 10]

greetings,

 

Can someone explain what it means to "fade" or fading and how to use the term

properly.

 

 

I think this one would be good to add it to the "trading terms" thread with

some good examples.

 

//michael

[TinGull 10]

Fading means taking the opposite of a trend. Say...price is coming into a pivot from underneath, and you expect the Resistance pivot to hold and price to not go through it. You would sell a position (go short) at that pivot to "fade" that pivot point.

 

Hope that makes sense.

[Guest cooter]

Yep. And here's a CBOT seminar on the concept too:

 

CBOT - Short-term Trading with the "Trade! or Fade!" Method

[hanz 10]

what the different between static and dynamic dom?

[BlowFish 10]

Dynamic DOM re-centres each tick on last price. Static stays centred until you hit a centre button. The latter is far superior other wise you are clicking a moving target to enter trades. Unworkable in my opinion. TT claim to have some sort of patent on the latter though I always thought it was complete hogwash. A search should reveal some of their outrageous demands and assertions.

 

I believe someone has finally challenged the patent in court. Hoorah.

 

cheers.