Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

orbacefx

Using TRIN for ES Intraday Trading

Recommended Posts

When Richard Arms introduced the TRIN (also called Arms Index) in 1967 through Barron's, it immediately got wide following by professional traders. The formula is quite simple yet a little bit intriguing - it is defined as a ratio of two ratios:

 

TRIN = (Advancing Issues / Declining Issues) / (Advancing Volume / Declining Volume)

 

Of course, initially the calculation was only done for all NYSE issues. As it started to gain popularity, other major stock exchanges started to report their own TRIN readings throughout the trading day. For this discussion, I am talking about the TRIN for NYSE only since most of S&P 500 stocks are trading in NYSE.

 

Without closely watching the actual values of TRIN in conjunction with the market action, it is very hard to get an INTUITIVE feel of this index. Of course, you can find many introductory material in the web for a typical reading - TRIN is a market breadth indicator, it has an inverse correlation with market movement: when it is below 1, the market is bullish, when it is above 1, the market is bearish, etc, etc...

 

Before I share my experience of using TRIN for ES intraday trading, I like to take an extra step to do a "zero" twist of this well-known index. Applying middle-school algebra, the TRIN can be expressed alternatively:

 

TRIN = (Declining Volume / Declining Issues) / (Advancing Volume / Advancing Issues)

 

or really it means:

 

TRIN = Average Declining Volume / Average Advancing Volume

 

WOW! Does that ring a bell?

 

So intuitively, TRIN is not a typical breadth indicator, especially in an intraday basis. What it really try to measure is the TRADING FLOW - whether the average down volume is more dominant, or is the other way around. So in an extremely bearish day (gap down, one-way street throughout the day), TRIN can shoot up to 3-4, and stay at an elevated level. On the other hand, if it can hover below 0.5 in a big rally day. In a typical day when S&P 500 index can exhibit uneventful intraday reversal, TRIN would most likely hover around 0.8 to 1.25 range.

 

More to come...

Share this post


Link to post
Share on other sites

I am using TRIN reading as a gauge of NYSE traders "sentiment" during the day: are they more willing to sell or more willing to buy? After all, the cash market for ES is in NYSE mostly. I usually focus on the absolute value reading, especially in the very first minute (9:31 AM, EST), but using a 5-min candle chart of TRIN overlaid with ES line chart would not hurt.

 

Let's first review two extreme days.

 

2012 0906 Thursday (see attachment 1), the initial reading is 0.65; during the first 5 minutes, it ran between 0.38 to 0.85. the 0.40 reading is really a bullish reading, it means more buyers are bidding the price up. For this kind of scenario, I usually reluctant to go short ES, even I had a very good reason from my primary methodology - if I do, essentially I am fighting the tape, not only I would waste energy and have less potential in the short side, but also I would attempt to cut short of my long position prematurely.

 

Every day is an unique day. Every day is an unique game.

 

With the benefit of hindsight, it turns out 0906 is a classic one-way street north. Of course, before it reached to the end, we never know what is gonna happen until it happened.

 

2012 1019 Friday (see attachment 2), the initial reading is 1.80; then it shoot up to 2.80 before it receded a little. Even though ES in Globex is only off 3-4 points before NYSE open, but 2.80 reading really shed some lights about the rampage of sellers in the equity market. This might be qualified as what Linda Raschke called "urgent market" - just put our position ON, at least half, and wait further confirmation. Value is irrelevant in times of market stress - it is all about our positions. Because market is always right, it will trade against positions.

2012-0906H.png.e4089c17296133d95c6e8259616de418.png

2012-1019F.png.29492d69955c1743daa4b98a377f2cbb.png

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Near Term Outlook Unchanged as AUDUSD Trades Weaker   AUDUSD Price Analysis – August 22 The Aussie is holding weaker so far with the yuan softer on the day on a softer note for the equities and treasury yields. However, yuan has a relative effect on USD as the PBOC fixed the yuan weaker again today, reaffirming the notion that they will allow the currency to weaken but not too quickly.   Key Levels Resistance Levels: 0.7205, 0.7085, 0.6827 Support Levels: 0.6748, 0.6676, 0.6620   AUDUSD Long term Trend: Bearish But as seen in the daily picture above, the near-term picture in AUDUSD remains unchanged despite the pair slipping to session lows on the level at 0.6748 currently. Both buyers and sellers have more work to do to gain more momentum to push prices out of the downward range since last week.   While the forex pair is experiencing a stall, this could just be a correction, as both the medium and long-term trends are still bearish.   AUDUSD Short term Trend: Ranging However, AUDUSD needs to break the monthly support zone on the level at 0.6676, which is currently providing support for the momentum on the pair at the level at 0.6748.   The currency exchange rate will most likely continue to trade downward and flat for today waiting for the required volatility to change the direction.    
    • Staying Within Previous Boundary EURJPY Continues to Trade Within a Range   %2> EURJPY Price Analysis – August 23 In today’s trading session, the common European currency traded sideways against the Japanese Yen. The currency pair was trading below the moving average 5 and 13 since yesterday’s trading session. We may see bearish traders pressurize the currency pair towards the level at 117.50 before the end of today’s trading session.     Key Levels  Resistance Levels: 123.01, 119.88, 118.33  Support Levels: 117.65, 117.50, 117.00    EURJPY Long term Trend: Bearish In the daily picture, the EURJPY pair may most likely maintain the price range during the next trading session. Alternatively, a breakout may occur downwards.  While the exchange rate has been trading within the range of the level at 118.33 and 117.50 since mid-August. The trend is bearish, showing an intact downtrend in the medium and long-term.     EURJPY Short term Trend: Bearish Today’s trading range has been going negative and more, and that’s below the last trading month’s daily average range. On the flip side, we may see a change in trend with renewed upward strength.   Buying could accelerate should prices move above the close-by swing high towards the level at 118.33 where further buy stops might get activated. Although with the level at 119.88 resistance intact, near term outlook remains bearish.  
    • Date : 23rd August 2019. MACRO EVENTS & NEWS OF 23rd August 2019.FX News Today A confluence of factors whipped the markets around Thursday heading into the Jackson Hole Symposium and Chair Powell’s comments Friday at 10 ET. Hawkish remarks from George (she dissented against the July easing) and Harker (who votes in 2020) weighed on Treasuries and erased early gains from Wall Street. Minutes from both Fed and ECB meetings were not quite the all out dovish signal that some had been hoping for and comments from Fed members yesterday also showed a degree of caution with regard to further easing measures. The curve in the US steepened again after inverting briefly overnight, the curve flattened and inverted further in Japan. Stock markets across Asia moved mostly higher although gains remained contained by caution. New Zealand’s central bank governor said he could afford to wait before declining on additional easing measures. Onshore Yuan set at its weakest for 11 years. Japanese core consumer inflation at a 2-year low in July. Meanwhile lingering geopolitical trade tensions and political jitters in Hong Kong, Italy and the UK add to an uncertain backdrop. US futures are also cautiously moving higher. The WTI future is trading at USD 55.37 per barrel. Charts of the DayTechnician’s Corner EURUSD returned to 3-week lows of 1.1064 today, after rallying to session highs of 1.1099 following the sub-50 US manufacturing PMI. Negative European yields appear to be taking their toll on the currency, keeping the Dollar in demand in place for relatively high yielding US Treasuries. This has likely been a major factor keeping EURUSD under pressure, especially ahead of likely ECB easing in September, and perceptions that the Fed will not be as aggressive in easing as previously thought. Key EURUSD level is the 27-month low of 1.1027 seen on August 1. USDJPY rallied to 106.64 highs. The risk-sensitive pairing can be expected to consolidate into today’s much anticipated speech from Fed chair Powell, from Jackson Hole. GBPUSD: Sterling had its best single day rally since March 13 against the Dollar. Cable’s high was 1.2273, which is the loftiest level seen since late July. The gains were sparked by comments made by German’s Merkel, who indicated that a solution to the Irish border backstop conundrum is doable by the October-31 Brexit deadline. UK Prime Minister Boris Johnson followed this up by saying at his joint press conference with France’s Macron that he was encouraged by his talks in Berlin yesterday, and that a deal, he thinks, can be done ahead of October 31. Macron, said, however, that while he has always respected the UK’s decision to leave the EU, the European project has to be protected, to which the Irish backstop remains an important part of ensuring this. Merkel’s remarks were little more than rhetorical platitudes, though enough to trigger a short squeeze in a heavy shorted currency. Main Macro Events Today   Jackson Hole Symposium – Day 2 Retail Sales ex Autos (CAD, GMT 12:30) – Retail sales are expected to have decreased in Canada, with consensus forecasts suggesting a -0.5% m/m decline should be registered in June and an unchanged ex-autos component at 0.3%. In May, Retail sales were disappointing, falling 0.1% for total sales and declining 0.3% for the ex-autos component. The decline in sales was driven by a 2.0% tumble in food and beverage stores. The report casts some doubt on the resiliency of the consumer sector to the ongoing parade of worrisome geopolitical and trade developments. Support and Resistance levelsAlways trade with strict risk management. Your capital is the single most important aspect of your trading business.Please note that times displayed based on local time zone and are from time of writing this report.Click HERE to access the full HotForex Economic calendar.Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!Click HERE to READ more Market news. Andria Pichidi Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Thanks for your suggestions man!! Our own decision surely makes us or breaks us. Thanks once again, buddy.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.