This is the second of many free indicators I plan to release. Since it massages the TICK data in ways I wasn’t sure was appropriate, I call it “The TICK Molester!”
Idea Behind the Indicator
If you read my two TICK articles (Better Know the TICK and Distribution of Random Market TICKs), then you know the interpretation basics:
- Don’t pay attention to low absolute values (less than 500ish on the NYSE TICK, for example)
- Don’t expect very high values to last forever (greater than 1100ish on the NYSE TICK)
- Any TICK reading is possible by chance, while sustained TICK levels represent a force in the market
I wanted a basic indicator to put these principles into practice, because I really hate reading the TICK in bar form. I mean, would you rather look at this (click to enlarge):
… or would you rather look at this (click to enlarge):
I know what I’d want…
The indicator has two simple inputs. You tell it what you think a significant TICK level is (cutoff1, default 500) and what you think an extreme TICK level is (cutoff2, default 1100). That’s all there is to it.
Some Screenshots
It’s very easy to see TICK extremes in this histogram form, and get ready to fade them (click to enlarge):
It’s very easy to spot TICK divergences (both standard and ‘hidden’ varieties) and watch for opportunities to exploit them (click to enlarge):
The default inputs are appropriate for the NYSE TICK, but you can set it for the TICKI or TICKQ if you want. Here’s a chart that shows the NYSE TICK (top) and the TICKI (bottom). Look at how the dow and the overall market were at complete odds with each other all afternoon, potentially contributing to the brutal chop in the ES that we saw (click to enlarge):
(also note the cool TICKI hidden divergence in the morning leading into the second leg up).
Download Links
This one was developed for Tradestation, Ninjatrader, Multicharts, and eSignal.
- Ninjatrader: 20090501TickMolest.zip
- Multicharts: z20090501TickMolest.pla
- Tradestation: Z20090501TICKMOLEST.ELD
- eSignal: tickMolest.efs
- ThinkOrSwim: eTICKMolesterSTUDY.ts (this one provided by Eternum)
[EDIT: Lots of people are trying to duplicate the charts above, and they are all putting the indicator on a plain ES chart. That won't work... you have to apply the indicator to TICK data. To get what I have above, you have to put ES bars and the TICK bars on the same chart, hide the TICK bars, and then apply the indicator to the TICK bars. This is possible with TS and Multicharts and to a lesser degree eSignal, but not ninja until NT7 comes out. You can still pull up a chart of the TICK on ninja and apply it.]
Enjoy… and as a reminder you can check out all of the free indicators by looking at posts tagged free-stuff.
I don’t think technical analysis really works. Intermaket analysis is different story.
And does the TICK fall into the ‘intermarket’ camp for you? How do you use it?
Nice work! I’m doing similar work with an oscillator i built based on A/D issues, A/D volume and intraday TICK relationships. I’m tracking it on my blog at:
http://thearchitectswingtrades.blogspot.com/
i call it the ADS, check it out.
I’ll do that, thanks! This indicator was made as part of a composite ‘market internals’ indicator I was putting together. It tied together the TICK, TICKI, VIX, and TRIN. On the whole, though, I found that the TICK was by far the most useful component. Maybe one day I will find better ways to read the other parts, but until then I tend to stick with the TICK. I haven’t done a lot with A/D but it’s on ‘the list’ of things to look at. We also for EOTPro once did a lot of work with putting together our own massaged index of S&P 500 components. Not much came out of that, but it’s something else I plan to re-address one day.
And, of course, if your chart has a white background, change the inputs so that the indicator is not white also, or you might waste 15 minutes of your life as someone I am very close to (me) did. :-)
Thanks, Richard!
You know, I thought about that for a second. But, unfortunately for you, only for a second. :-) Sorry about that.
Richard,
Thank you so much for posting this indicator. I seems like it will be a great addition to my arsenal. Have you ever looked at NeoTicker for creating a customer tick I believe one version is Tick 16.
I was unable to get a tick chart applied to a minute chart in TS. Can you be a little clearer about how to apply this to TS?
Hey Frank,
I don’t have TS so the words I’ll give won’t be exact, but it’s something like:
1) Add ES to your chart.
2) right click, and one of the menu options should be format symbols or add symbol or something.
3) add the $TICK
4) format the $TICK, and on one of the tabs you should be able to set hide the bars in some way.
5) Add the indicator, and make sure you point it to the $TICK data, and not the ES data.
Maybe someone who still has tradestation can be more specific, but I know it is still possible (people have shown me its use)
Richard, Great article and thanks for the indicator.
Thanx for great articles on the Tick and a interesting indicator.
I´m trying to understand the indicator. Could you please explain the reasoning behind the formula.
for example: a 300-1200 tick reading would plot:
high tick > 500 = 1200-500
median price (450) 1100 = 2*1200 – 1100 = 1300
low tick > 500 = 0
so the value is 700+1300=2000
and the plot is (past value) + 2*(2000)/3
I´ve read your post a couple of times but I just can´t figure it out. I´m almost embarassed asking because everybody else seems to get it :)
Hi filip, probably no one else thought about it that hard. The reasoning behind the formula is all rooted in the 3 principles of TICK reading that I outlined in this post.
Readings beyond the thresholds win points either positive or negative. So a bar from 0 to 600 gets a score of 100. A bar from -600 to 600 gets a score of 0, since neither side really won.
The median price check gives bonus points to tick bars that are very positive or negative. This differentiates a 400 to 900 bar from a -400 to 900 bar.
We want to de-emphasize temporary extremes as much as we can without making the indicator laggy. So, we give the current score a weight of 2/3 and the previous score a weight of 1/3 and plot the average. This gives us a lag of 1/3 of a bar, which I think is acceptable, and smooths out the worst of the choppiness.
Hey Richard,
What are the settings that you recommend when using the Tick Molester on ES?
Hi James, you don’t use it on ES. You use it on the $TICK. I use the default settings.
No wonder I was having problems. lol.