Stocks & Commodities V.

18:4 (36-41): How To Use Tick, Tiki, TRIN For Day Trading by Terry OBrian
INDICATORS

How To Use Tick, Tiki, TRIN

For Daytrading
These three indicators can be important guides in implementing trading strategies. Could they help you?
by Terry OBrian

he tick, the tiki, and the trading index

(TRIN) indicators that are for the
most part unknown outside trading
circles can be important guides in
implementing trading strategies. All
other indicators are derived from these
three; more important, theyre easy to
use and interpret. Critical to the use

and understanding of any indicator, but especially in regard to

these three, is the context in which we use them and the
questions we want them to answer.
The tick, the tiki, and the TRIN measure what I refer to as
the pressure or the flow of trades in and out of the market. The
tick and the tiki are essentially indicators made up of subtractions, while the TRIN is essentially a calculator. The tick
covers all stocks on the New York Stock Exchange (NYSE),
as does the TRIN, while the tiki measures only the Dow 30
stocks. Neither the tick nor the tiki utilize volume in their
calculations, but the TRIN does. Finally, each indicator has
important and distinct characteristics.

FIGURE 1: TICK

FIGURE 2: TIKI

TICK

TIKI

The tick (Figure 1) is derived by subtracting the number of

stocks heading down from the number of those heading up. It
is an excellent intraday guide as to where the market is
heading in any given time frame. As a rule of thumb, a tick
movement above zero and going up supports a long position;
below zero and falling supports a short. Typically, the tick
indicator has a range between +600 and -600. The upper,
positive range indicates buying pressure; the lower, negative
range indicates selling pressure. At its extremes, the tick
becomes a contrarian indicator. For example, a +1,000-tick
movement, difficult to sustain for any period, is a clue to go
short; buying power is running out. Conversely, a -1,000-tick
movement may signal a long position and is almost always
good for a quick scalp. Most quote services provide the tick
on an intraday and end-of-day basis.

The tiki (Figure 2), a Dow 30 indicator, looks only at the Dow 30
stocks and plots on a scale of -30 to +30. An indicator for much
of the NYSEs history, it has in recent years become popular and
even necessary, with the advent in the last 10 years of program
trading on a large and almost daily scale. The tiki provides
essential input to the trader, as these huge buy and sell programs
often use the Dow 30 stocks to execute these programs.
The tiki confirms whats driving the tick by signaling the
onset of buy/sell programs. When the tick is in the +1,000tick range and the tiki is beyond 22 (either positive or
negative), its likely that program trading is in charge of the
market at the moment. This is because concerted action
across a broad range of stocks forces the tiki to extremes.
Generally, after the program ends, the market settles back
into a more normal range. A tiki of +26 or -26 is a viable signal

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Stocks & Commodities V. 18:4 (36-41): How To Use Tick, Tiki, TRIN For Day Trading by Terry OBrian

to fade the trend for a few quick points. PC Quote and Data
Transmission Network (DTN) both provide the tiki indicator.

TRIN
Like the tick, the TRIN (Figure 3) is broad-based; it indicates
underlying market sentiment by measuring the volume in advancing and declining issues. Developed by technician Richard
Arms (see sidebar TRIN and tick), a TRIN above 1.0 signifies
bearishness, while a reading below 1.0 denotes a bullish feel.
For the intraday trader, the direction of the TRIN is more
important than the absolute number. A dropping TRIN is
bullish, an indication that buyers are coming in, while a rising
TRIN warns of sellers. A steady number tells you the market
is stable, and a change in its direction warns of a turn. One
caveat: During the first half-hour of trading, the TRIN tends
to be erratic. Wait until it settles in before using it as a trading
tool. (The TRIN is available in most quote services.)
Taken together, the three Ts tick, tiki, TRIN reveal:

FIGURE 3: TRIN

The intraday trend

The potential of continuing that trend

In a consolidating
market

look for an
indicator to
precede

a price action.

Precise entry points in an already trending market

The entry point at which the risk/reward ratio is best
skewed in your favor, and
The most logical place to take profits.
As with all technical tools, mastery takes practice, so how can
you gain proper perspective (and a shot at mastery)?

MEASURING PRESSURE
Each day, youre faced with one of two types of markets:
trending or consolidating. According to some statistics, the
market trends about 22% of the time and consolidates the
remainder. Pressure indicators like the tick, the tiki, and the
TRIN are suited to either type of market.
I track the three indicators on five-minute charts and
recommend that you start there as
well. Any shorter time frame is too
given to whipsaw for my tastes; once
you become comfortable with this
trading method, youll find your own
rhythm.
Uptrend: In an uptrending market, I
want to see everything in sync: TRIN
below 1 (noted as 100 in Figures 1
through 6) and falling, the tick indicator in a positive channel and climbing, and the tiki indicator showing
buying programs.
Tick leads price: In a flat or consolidating market, I look for movement
in one or more of the indicators to
precede price moves (Figure 4). If

FIGURE 4: CONSOLIDATING MARKET. As the

market consolidates (1), the tick breaks lower
(2), followed by the market (3).

1 In a
downtrend
2

2 the TRIN
1

should be
rising

3 the TICK
should be
falling

4 and the TIKI

3
4

FIGURE 5: DOWNTREND. In a downtrend (1), the TRIN (2) should be rising and the tick (3)
should be falling, while the tiki (4) is showing selling programs.

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showing selling
programs.

Stocks & Commodities V. 18:4 (36-41): How To Use Tick, Tiki, TRIN For Day Trading by Terry OBrian

the indicators dont support the

breakout, Ill fade it. When they offer
support, Ill join in.
Downtrend: In a downtrend (Figure
5), the TRIN should be rising, the tick
should be falling, and the tiki should
be showing selling programs.

TRIN AND TICK

TRIN, also known
as the Arms index, is calculated
as a ratio of two
ratios: advancing
issues to declining issues and
advancing volume to declining volume. Mathematically, thats
TRIN = (AI/DI)/(AV/DV)
where

CARMELO BLANDINO

AI = Number of advancing
issues
DI = Number of declining issues
AV = Volume of all advancing issues
DV = Volume of all declining
issues
Since daily TRIN is unitless, its
independent of the number of issues traded or the total volume
traded. Therefore, comparisons can
be made between different days
results.
The tick indicator is volatile, but
its general level and extremes are
helpful. Often, tick will lead index
price action, because, after all, individual stocks must move before
the index can move. Needless to
say, this is helpful to index
daytraders. More common, extremes in the indicators value are
good for positioning against extreme intraday price moves, capturing any snapback. In addition,
ticks ranging between zero and
-1,000 should confirm downtrends,
while those ranging between zero
and +1,000 should confirm
uptrends. Those periods with ticks
between +500 and -500 should be
relatively flat. Again, look for tick to
lead price out of the old ranges.
T.O.

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Stocks & Commodities V. 18:4 (36-41): How To Use Tick, Tiki, TRIN For Day Trading by Terry OBrian

intraday or intermediate time frame, I use a 60-minute chart

of the DJIA or the S&P with a 50-period moving average
placed across that price stream. If prices are above the
average, Im long; if prices are below the average, Im
short. I like the longer time frame because it minimizes

A1

B1

C1

D1

FIGURE 6: TRACKING TIKI. Watch the extremes and the general level of tiki for a clue about
market stance. Values outside the 1,000 range (A) cannot be held, so the market should snap
back or stabilize. Values in the 500s (B and D) usually indicate the market is flat. When it breaks
out of that range (C), you can usually count on continued movement in the direction of the
breakout.

Always be alert for major shifts in any of the three indicators. Such a shift may signal a quickly coming change in
market sentiment. After hours of heavy selling, for example,
a major buy program will sometimes turn the market around.
But dont be hasty; if one of the indicators signals that turn,
wait for the other two indicators to confirm that change in
sentiment before taking a position contrary to what had been
the prevailing trend.
In a trending market, the tick and the tiki are excellent
guides for entry at the most reliable pullback. In a downtrending
market, for example, wait for the tick to pull back to zero or
move higher before entering a short position. Also in a
downtrending market, watch the tiki for buy programs; the
conclusion of those programs offers excellent entry opportunities on a short position.
In a flat market, try working both sides of the tiki scale
selling against buy programs and buying against sell programs. Such trades are often good for a quick scalp; just
remember to be nimble.
On occasion, the indicators and the indices will go their
separate ways, creating divergence. Divergence is nothing
more than the lack of confirmation. The tick normally parallels the Dow Jones Industrial Average (DJIA) and the Standard
& Poors 500 index; as the indices make new intraday highs or
lows, so does the tick. Divergence occurs when an index moves
to a new level and the indicator doesnt. The difference very
often sets up a reversal or consolidation in a trend. Though
seldom immediately tradable, a divergence signal should alert
you about an impending shift in market mood.

Unless specifically noted, nothing here is

meant as a green light to initiate a trade
against the trend. To determine the trend in
the intraday or intermediate time frame, I
use a 60-minute chart of the DJIA or the
S&P with a 50-period moving average
placed across that price stream.
whipsaw. Among new students, the most common error is
taking a position on the wrong side of a trend, so this is
something I stress often. Such disregard for the markets
thinking cant continue for long without severe financial
damage. And there isnt an indicator in the world that can
correct that.
Terry OBrian has been trading options and futures for 17
years and teaching trading methods for the last 10.

RELATED READING
Arms, Richard W., Jr. [1989]. The Arms Index: An Introduction To The Volume Analysis Of Stock And Bond Markets,
Dow Jones-Irwin.
_____ [1991]. Using The Arms Index In Intraday Applications, Technical Analysis of STOCKS & COMMODITIES,
Volume 9: April.
Merrill, Arthur A. [1992]. Closing Tick, Technical Analysis of STOCKS & COMMODITIES, Volume 10: February.
Ord, Tim [1992]. Market Turns And Continuation Moves
With The Tick Index, Technical Analysis of STOCKS &
COMMODITIES, Volume 10: December.
_____ [1991]. Picking Tops And Bottoms With The Tick
Index, Technical Analysis of STOCKS & COMMODITIES,
Volume 9: June.
Rusin, Jack [1992]. The Internal Dynamics Of TRIN, Technical Analysis of STOCKS & COMMODITIES, Volume 10:
January.
See Traders Glossary for definition

SUMMARY
Unless specifically noted, nothing here is meant as a green light
to initiate a trade against the trend. To determine the trend in the

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