The tick index indicator is an indicator series used to measure the market’s health by comparing the number of stocks rising to the number of stocks that are falling on the New York Stock Exchange (NYSE). (Try out indicators on Tradingview.com)
The index shows the difference between stocks trading uptick and the stocks trading downtick. The indicator has an easy format to follow, and it becomes much visible when there is a strong move in either direction.
Features of Tick Index Indicator
• NYSE stocks
• Uptick
• Downtick
• Tick
Calculation of Tick Index
The Tick index is calculated by finding the summation of stocks making an uptick minus stocks that are making a downtick.
TICK Index = Sum of uptick stocks – Sum of downtick stocks
For example, if 2500 stocks are trading in NYSE and 1500 stocks has made an uptick while 1000 stocks have made a downtick:
Tick Index = 1500 – 1000
= 1000
Understanding the Tick Index
The indicator helps traders in understanding the overall market sentiments at a given point in time. By using the up stock and down stock ratio, traders can make informed decisions as guided by the market movements.
Traders should also be aware that the indicator is short-term and only valid for a few minutes. The indicator may be unreliable for traders with longer term strategies as the tick index is a very speculative identifier of market sentiment at a specific point in time.
What does the Tick Indicator chart tell us?
• The increases in the prices of stocks might be exaggerated or fake in the morning session.
• Decreasing of Tick values from the previous market indicates continued weakness.
Application of Tick Index
• Traders can apply the index in timing an entry and exit of a choppy market.
• Traders will quickly identify a trending market when the tick index remains above or below zero for an extended period.
• Traders can be able to gauge the underlying strength of the market.
Comparison between TICK & TRIN Market Indicators
Tick indicator is used to assist traders in spotting trends. On the other hand, the Tick index Indicator a technical analysis indicator calculated by dividing the advances-to-declines spread by the volume of advances to declines.
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