Trade to Win - Proven Strategies to Make Money

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Commonsense Market Indicators 59

information from the S&P futures and the NYSE tick and synthesizes it and

smooths it out. The TTICK readings run from+30 to –30. A reading of 10 is

deemed to be noteworthy;+10 is strongly bullish, and –10 is strongly bear-

ish. When readings approach 20—either plus or minus—prices are proba-

bly reaching an overbought or oversold condition and there may be a brief

rest in the move. Under certain market conditions, I rely heavily on this

indicator and consider it in the context of the total market. For me, the

TTICK is another weapon in my arsenal.

There are times when the TTICK is positive and the NYSE tick is neg-

ative. That is a clear message to stay away from my mouse and out of the

market. The TTICK has helped me many times, and if in doubt about a

trade, I look to the TTICK for guidance. Among the indicators, it is often

my ultimate judge.

Review

Computers allow for many calculations to be made very quickly. There-

fore, modern traders have the ability to obtain statistical analyses about

almost anything. Such easy access to information is a double-edged sword.

Information is good, but too much information can be unsettling and lead

to the inability to see a trade and make a decision. While you are analyzing

the data, the trade comes and goes without an entry. Therefore, I use a few

pieces of data to help me see through the market maze. I rely heavily on the

futures indexes, including the S&P, Nasdaq, Dow, Dax, gold, oil, and bonds.

I refer to these indexes as the Seven Sisters. When trading, I want these in-

dicators to agree with one another and be moving in the same direction.

If all of them are moving up, I will likely be considering a long position. I

certainly will not be going short. If they are trending down, a short will be

my play. However, if even one of these futures indexes disagrees with the

others, I will stay out. Divergence is a sign of caution, and wise traders will

heed it.

I also track the NYSE issues, the Nasdaq issues, the NYSE tick, and the

TRIN or Arms Index. In addition to this information, I have devised two

proprietary indicators: the TTICK and the V-Factor. These gauges measure

momentum and volume and help me stay on the right side of the action.

Time, key numbers, and the statistical indicators noted in this chapter

are my market filters. Using these market fundamentals keeps me on the

winning side of the action most of the time.

PEARL 6

Do not worry about the direction the market goes. Go with the market.