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Very few traders rely on one indicator alone for confirmation.

Top traders will stack a few they trust and rely on…

The more confirmation the indicators provide…

The greater your confidence should be.

That’s why I want to share with you two indicators which can be used in tandem…

Which can help you improve your timing, as well as, improve your odds at winning.

 

Daily Deposits

 

The mission statement at Daily Deposits is simple… to make money day in and day out.  

The strategy deployed using a proprietary blend of pre-market indicators to target and execute on momentum throughout the trading day.

Why momentum?  

Because a great strategy to take advantage of market trends is hard to beat.  Strategies that follow the trend are easy to follow, simple to trade, and can produce mind-blowing returns without breaking a sweat.

Daily Deposits come with 2 key indicators to determine the real trend of the stock for the trading day

2 Key Indicators :

  • 30 Minute Range
  • The TICK Indicator

Let’s take a closer look at each of those indicators

 

30-Min Range Breakout

 

After you have identified the pre market trends, the next step is to look at the 30 minute range breakout.

Here’s an example of the 30 minute range breakout

 

Source: Thinkorswim

 

And as we can tell, once that 30-minute range is officially broken the markets picked up downward momentum and closed near their lows.

Always remember… This is a high probability setup and when it hits can easily give you 3 to 1 risk/reward and often even more.  

Here’s a checklist for trading an opening range breakout combined with market momentum

  • Have a bias:  Long/short/none.  Don’t take a direction if you don’t have a supporting bias from the overnight session.
  • Establish your bias:  Base on daily, 15 min, and 5 min chart price action and pre-market momentum
  • Trade in direction of the breakout and your biased direction

 

TICK Index

 

The TICK Index is also referred to as the Breadth Indicator since they analyze the “Breadth and Scope” of an entire index. 

The definition:  The TICK Index compares the number of stocks that are rising to the number of stocks that are falling on the New York Stock Exchange (NYSE).

How does this work?

Well, the index is a summation of stocks that are making an up-tick and subtracts stocks making a down-tick.

Now that we know why this is important, let’s see how we can use this information to make informed trading decisions.  

Understanding the TICK index offers traders a great short-term perspective of overall market sentiment and how the rest of the traders feel about the market prices.

The ratio of stocks on an up-tick versus the number of stocks on a down-tick allows a short-term actionable data point for traders to take advantage of.

How to read the TICK Index “zones”:

  • Value between -300 and +200 indicates a neutral market sentiment and gives traders a “wait and see” signal.
  • Values greater than +200 indicate a bullish market sentiment and signals that other traders are bullish with their trading and a long position can be initiated.
  • Values less than -300 indicate a bearish market sentiment and signals that other traders are bearish with their trading and a short position can be initiated.
  • Values over +500 are considered extremely bullish
  • Values over -500 are considered extremely bearish

Here’s an example of the a TICK chart

 

Source: Thinkorswim

 

Putting It Together

 

As you can see, these two individual signals are strong by themselves and don’t need much more.

But when you combine them, you get an extremely powerful signal to trade with.

 

Source: Thinkorswim

The TICK Index and 30 minute range breakout has become one of my favorite supplemental indicators to watch to confirm price action and trends in a day trading system.  

Traders can take advantage of observing immediate market sentiment over the short-term and initiate trades to capture quick movements in the markets.

This small window of opportunity for a trade is limited and also provides insight as when NOT to take a trade if being used for risk management purposes.

Breadth indicators such as the TICK are proven tools in the markets by the number of traders that utilize this information daily.  

In order to implement this strategy into your daily routine, sign up now and learn my exact tips and tricks that I use every day to trade the markets!

Click here to sign to Daily Deposits

Author: Ben Sturgill

Ben leads two services at RagingBull. IPO Payday can help you pinpoint, position, and profit from IPOs. In Daily Profit Machine Ben guides day and swing traders to profit by trading the SPY Index. Ben hosts the RagingBull.com weekly podcast WealthWise where he shares thoughts on wealth and success with traders, businesspeople, entrepreneurs, and experts to uncover and share the wisdom needed to live a wealthy life.

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