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Tick Speed and Direction

How a market does what it does, is just as important as what it does! When day trading, watch closely the way prices tick. If ticks are jumping, someone may be taking the market up or down. If the market ticks fast, it may be a clue to an upcoming fairly good-size move.

Watch volume in conjunction with tick speed and direction. Fast ticking is often accompanied by an increase in volume. If prices move only a few ticks and then retrace, this tells you that scalpers are dominating the market.

If you are position trading, look at volatility as the range of price movement divided by time. A market that falls ten price units in two days and takes four days to recover five price units is going to fall again, most likely below the previous ten-unit sell-off low. Acceleration is the difference between two points of velocity, which is directional price movement. Acceleration usually turns bearish before a trend reversal. Velocity defines trend as long as it is positive over specific time periods.

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Thursday, 13 May 2021

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