NYSE Tick – Boost Your Day Trading Profits

As day trader, you need to always be looking for ways to improve your edge.The NYSE Tick is the perfect trading indicator to do just that by improving your entry points on trades.

What Is a Tick?

A tick is the minimum movement either up or down of a security. Since 2001 the minimum movement for stocks trading above $1 has been 1 cent. If you trade Forex a tick is similar to a pip which is equal to 0.0001 for currencies that are traded to 4 decimal places.

Future contracts have different tick values depending on the security your trading. You can look up contract specs for eMini products at http://www.cmegroup.com/.

Uptick

A security is considered to be on an uptick when the last price traded is higher than the previous price. For example, the last trade on Microsoft (MSFT) was $60.10 and the trade prior to that was at $60.09. MSFT would currently be on an uptick.

uptick

Down Tick

Opposite of an uptick, a security is considered to be on a downtick when the last price traded is lower than the previous price. For example, the last trade on MSFT was $60.25 and the trade prior to that was at $60.26. MSFT would currently be on a downtick.

downtick

NYSE Tick Index

Now that you have an understanding of what a tick is, it’s time to put it all together.

The NYSE Tick Index is a calculation of all the NYSE stocks on upticks less all of the stocks on downticks. The NYSE Tick provides you an overall view of market sentiment in the short term. You are able to see the number of ticking “up” versus “down” stocks very easily. This is beneficial as a day trader when you need to make quick decisions.

Key Tick Levels

The chart above is from the ThinkorSwim platform and the NYSE Tick ($TICK). I simply added some horizontal lines at 0, 250, -250, 500, -500, 1000, & -1000.

Market bias is considered to be neutral when there is a tick reading close to the zero level. I personally consider a tick reading over 300 as bullish and below -300 as bearish. When the tick count approaches or breaks 1000 or -1000 I view it as a bullish or bearish extreme.

Volatility & Tick Count

During volatile markets you are much more likely to see multiple extreme high and low tick counts than you are during less volatile periods. You must take this into account when using the NYSE Tick to evaluate short term bias.

NYSE Tick Low Volatility

On the chart above of the NYSE Tick you can see the tick count remained within +500 to -500 for most of the day, never exceeding +1000 or -1000. This is a representation of a lower volatility day. On days with lower volatility I consider a tick count of +500 or greater to be bullish extreme and -500 or less a bearish extreme.

NYSE Tick High Volatility

The chart above represents a high volatility day where we see the tick count exceed +1000 and -1000 multiple times. On higher volatility days you must increase what you consider to be a tick extreme.

How To Use The NYSE Tick

The NYSE Tick is a great day trading indicator and can be use by both trend traders and countertrend traders.

Trend Traders

A trend trader will look for the tick count to break above or below what he/she considers to be a bullish or bearish zone to enter a trade.

I use the NYSE Tick to confirm potential trade setups, not as a stand alone trading strategy. When I spot a trade setup I look to confirm my entry using the tick count. If I’m looking to go long I want to see a sustained tick count above 300. If I’m looking to go short I want to see a sustained tick count below -300. I consider a sustained tick count when the tick holds above or below 300 for a couple of seconds.

Remember that the tick count is a very short term indicator. After I enter a position I only look to see if the tick count reaches an intraday high or low. Otherwise the tick count plays no role in determining where I will exit a position.

Countertrend Traders

When the NYSE Tick reaches an extreme, +1000 or -1000 on high volatile days, it can be a sign of a potential market reversal. A tick extreme can signal a blow off top or bottom where weak handed traders are blowing out of their losing positions and in some cases flipping their position.

Countertrend traders look to cease this opportunity by fading the market. If you are a counter trend trader I still suggest that you look for additional confirmations prior to entering a trade.

I personally don’t view the NYSE Tick as a trading strategy itself but there are some traders who do.

Intraday Highs & Lows

No matter if you’re a trend trader or a countertrend trader you will want to pay close attention to intraday tick highs and lows. These highs and lows tend to be major market reversals. Even though I won’t exit a trade just because of an intraday high or low, I do put myself on caution and tighten my stops.

Other Tick Indicators

There are several tick indexes depending on what markets you trade.

$TICK – NYSE Tick Index

$TICKQ – NASDAQ Tick Index

$TICKA – Amex Tick Index

I personally only use the NYSE Tick even though I trade multiple markets such as the eMini Nasdaq 100. Although the $TICKQ is the better representation of the Nasdaq market, I feel the most robust moves occur when all the markets are in unison.

No matter what Tick Index you’re thinking of using I suggest you start by simply adding it to your charts and paying attention to it. It will take time to be able to read the tick count and see how it can play an advantageous role in your trading strategy.

Tick Index Indicators are most useful when trading stocks or index futures as they are derived from those markets. However, there are correlations that exist between other markets like Forex and Crude Oil Futures.

The NYSE Tick Index can greatly improve your order entries increasing your profits and keeping you out of false moves. Remember to pay close attention to intraday highs and lows. Make sure to let us know how the NYSE Tick or other Tick Indexes have helped improve your trading in the comments below.

Day Trading Secrets – Discover What It Really Takes To Be Successful

What’s the best way to learn how to become a successful day trader?

To learn from a mentor who has proven a path to success…

The following list of day trading secrets is a result of lessons I have paid to learn throughout my trading career, some multiple times. The goal of this post is to give you some insight into the truths of trading and what really takes to become a successful trader.

Day Trading Secrets

The following list of day trading secrets is in no particular order. Certain truths or secrets will be more valuable to you than others depending on where you’re at in your trading career.

With that said, lets get started…

1. The “Holy Grail” Trading System

Simply put…it DOES NOT exist!

My trading career began at one of the largest proprietary day trading firms in the world. As a top trader and trainer at the firm I became friends with a number of elite traders.

Most traders at GPC were very secretive of their strategies. Can you guess why? Typically because the strategy they traded was extremely simple! They assumed assumed if other traders knew what they were doing that everyone would soon trade the same strategy, diminishing their personal edge.

This is complete BS. Most traders don’t realize that 80% of their success is a direct result to trading psychology to their and only 20% to the actual system.

Understanding this is the true holy grail of trading. The majority of successful traders trading systems are very simple. It’s the trader and his or her complexities that makes the system profitable.

There never could be a holy grail trading system due to the fact that the trading system has to fit the personal traits of the person trading it. Without this key factor, even the best trading systems can fail.

Not to say there aren’t complex systems out there that work. I have traded some of my own complex algorithms that have been very successful, but at the end of the day I still consider some of my best strategies to be some of the simplest.

2. Traditional Discipline is BS

There’s not an educator out there that won’t tell you that you need discipline to be a successful trader. While this is true, I don’t think most people try to achieve discipline in the right manner.

This is not only one of the best day trading secrets but a secret you need to experience growth and success in life.

Pure discipline should be effortless and is a result of changing the way you think as well as changing your habits.

Most people simply view discipline as the ability to say no to something or to do things they don’t want to do but know they should. They puff their chest out and just stick to what they said they would do and say, “I have discipline!”

This is the white-nuckle approach to discipline which over the long run the usually fails.

True discipline comes as a result of changing the habits and the way you think about the action that you consider undisciplined.

Consider a trader who is  overtrading. They continually fight the urge to trade. In the long run this trader will fail to prevent overtrading if he doesn’t closely examine and understand what the pros/cons are of overtrading.

Another real life example is quitting smoking. I tried numerous times to quit smoking and ultimately failed using the white-nuckle approach. I’d fight to not smoke and would eventually give in.

It wasn’t until I challenged my thoughts and how I viewed smoking and  replaced some of the bad habits that could induce smoking that I was able to quit. To be honest quitting when I reached this point was easy.

Whenever I had the urge to light up in the first few weeks I would examine in my head what the pros and cons were of quitting were. Even the worlds biggest idiot could tell you the pros outweighed the cons.

Eventually I realized I wasn’t giving up anything and there wasn’t a single positive that came from smoking. I also changed habits, such as going out drinking, that could lead me to starting smoking again. As a result of this method I knew I would never smoke again.

To become truly disciplined you can’t just use the white knuckle approach. You have to view the pros and cons of every decision your going to make as well as replace the habits that make it difficult for you to achieve a particular goal or status of discipline.

Finally, discipline is not a state of being. It’s something that has to be constantly worked on throughout our entire lives. It’s almost impossible to become a disciplined trader if you are completely undisciplined in other areas of your life. So time for you to start doing some reflecting and  work on changing habits, resulting in more discipline all around.

3. Traders Are Hard Workers

Most people think that those who are successful at trading have simply figured out a day trading secret strategy or system. Once you have it trading and life will be easy. Place some trades and collect checks every month.

This is so far from the truth. All of the successful traders I have known are some of the hardest working people I have ever met.

Yes, for the best traders in the world trading is close to  effortless. However, this doesn’t mean it doesn’t take hard work. It’s effortless as a result of all the preparation which is where all the hard work comes in.

We compete in one of the most competitive environments in the world and they’re is always someone behind you happily willing to take your place. As a successful trader you have to constantly be trying to hone your systems edge and psychologically as well.

Like any industry, the markets are always changing. Opportunities that exist today may not tomorrow. Just ask all of the floor traders as well as the prop traders before algorithms began to dominate the market. (I was one of them)

If you didn’t adapt you became a dinosaur and eventually lost your edge and exited your career as a trader.

In the last 15 years I have been trading I have had to make 3 major shifts as the markets changed.

I began my career at GPC purely as a Level II trader reading order flow. This edge began to diminish as more and more algorithms came into the market.

Next, I traded an algorithm that took advantage of price discrepancies at retail forex brokers during news events. It was extremely successful for a few years before the opportunity was arbitraged away.

Finally, I shifted to a brand new market in Index Futures which I had very little knowledge about several years ago. It took time and hard work but eventually I developed a profitable strategy.

I don’t have a crystal ball of the next major shift in the market but I keep a close eye on traders that I respect and what they’re doing. I also keep a close eye on my trade journal to notice any major shifts in performance that could be a result of my strategy and not my execution.

Don’t ever get comfortable, no matter what industry your in. Rainy days are always coming, and those who are prepared and can weather the storms are those who will ultimately succeed.

4. Plan or Fail

This really isn’t a day trading secret, it’s common sense. You have to treat trading like any other business and you have to start with a plan. Most business startups that don’t have a well defined plan fail.

Your trading plan needs to outline exactly what your trying to accomplish and how. Every single step.

Not only do you need to have a plan, it has to be backed by numbers.

Backtesting is key to building a successful strategy. First, it lets you know whether a strategy can actually be profitable! Second, it helps build confidence that will be needed during drawdowns.

Learn more about my trading plan template here.

5. Learn From Your Mistakes

Every mistake can be valuable if you choose to learn from it.

Documenting in a trade journal every single trade you take along with photos is essential to growing as a trader. I also comment at the end of everyday on what I did well and what I could have done better, along with the overall sentiment of the products I’m trading.

When I’m in drawdowns I can read my journal and see the mindset it took to bounce back in the past. Or I can read journals from great days to build confidence allowing me to realize it’s just a matter of time until I recover.

6. You Don’t Need A Lot of Money

One of the questions I am asked the most is how much money do you need to day trade. My answer is usually zero as this is how I realistically began.

When I started at GPC I traded on a simulator for almost two months prior to going live. If I wasn’t able to prove myself in a simulated environment to the owners there is no they would have ever backed me with capital.

If you can’t make money in a simulated environment why would you ever trade real money?

Even if you’re broke you can trade in a simulated environment. TD Ameritrades ThinkorSwim Platform is free and provides free real time data for every security you could want.

Once you have proven yourself in a simulated environment I’m sure you can talk to a few friends and family and raise some cash.

Once you do go live, you should start with a minimum of $3,000. Now this doesn’t mean you should quit your day job and expect live off of your earnings. It will take time to build an account of this size up. In doing so you are also more likely to value and protect your money when trading.

Finally, never trade with money that you can’t afford to lose. It generally leads to irrational decision making resulting in losses and a blown up account.

7. Accountability Is A Must

My trainer at GPC was my accountability partner when I began my career and was paramount into me becoming the trader I am today.

Research shows that having a partner or “accountability partner” can be very effective at ensuring we will actually follow through on something, not just talk about it.

Dr. Robert Cialdini, a well-known social psychologist, who has studied and written a great deal about decision-making.

His studies show that peer pressure is powerful, especially when making complex or stressful decisions. He also states that the closer you are to the person or group, the more likely you are to be influenced by them.

When looking for an accountability partnership consider the following:

  1. Find someone you trust that can be completely open with you. Typically someone with a different personality from you can be a plus.
  2. Talk to them about your trading goals.
  3. Get specific about your trading plan especially in terms of risk management.
  4. Setup regular reviews with them. When you’re new to trading it’s best if you can have a brief discussion everyday even if it’s through text, followed up by a weekly recap conversation.

Every member of JT has the choice to use me as an accountability partner as well. Obviously I have time constraints but I am more than willing to work on monthly or bi-monthly review with traders. Typically we do this in a group setting.

In the end we are much more likely to reach our goals if someone is helping us keep us on task and cheer for us along the way. Smart traders realize this and integrate this type of relationship into their plan.

8. Patience Pays

“I just wait until there is money lying on the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime. Even people who lose money in the market say, ‘I just lost my money, now I have to do something to make it back. ‘No, you don’t. You should sit there until you find something.” – Jim Rogers in Market Wizards

The above statement by Jim has saved me money time and time again. Take a second a reread it…

One big mistake new traders make is over trading. When you begin trading it can become very easy to become addicted to the rush of winning and losing money. If you allow this to happen you’re no different than the addicted gambler at a casino.

You don’t have to catch every move, there will always be more opportunities. Wait until you see an opportunity that fits your strategy and plan, and then spring into action.

Conclusion

Becoming a better trader is a life long process that requires reflection and trying new things resulting in growth. These day trading secrets or tidbits for success will help you propel your trading career if reflected upon and implemented.

If you enjoyed this post and are serious about becoming a trader or improving your skills you should sign up to be a JT Member. Hey, it’s free… Enroll Now!

Make sure to share your thoughts and any other day trading secrets you have personally discovered!

Best Markets for Day Trading – A Complete Review

If I were to ask what the best markets for day trading were, the majority of people would respond Forex or Penny Stocks.

Most marketing pushed at new traders is primarily centered around Penny Stocks or Forex. Especially when it comes to education. However, I don’t believe either of these are the best markets for day trading, especially if you’re a beginner.

You might ask, “Why are the majority of educators teaching these markets then?”

The main reasons is leverage and barriers to entry. Most people don’t have $25,000 to start trading to get past the Patter Day Trading Rule established by FINRA. You can open a Forex Account with most brokerages for $1000 and in some cases even less.

On the same note, Penny Stocks offer high volatility with the potential for big returns considering a higher leverage due to the price of the underlying assets coupled along with high volatility. However, this is a dual edged sword that most new traders fall victim to.

In this article we will discuss the advantages and disadvantages of trading Penny Stocks, Options, Forex, and Futures giving you everything you need to make an informed decision on what markets are best for day trading.

Best Markets For Day Trading

To begin, let’s review some factors you need to consider when deciding which markets are best to day trade.

Liquidity

Market liquidity describes the ease at which you can buy or sell a security without affecting the asset’s price.

When trading in an illiquid security, there becomes a point where you begin to manipulate the price when you enter and exit a security. This creates two problems.

  1. It puts a cap on how large you of a position you can eventually put on. Thus limiting your overall upside as a trader.
  2. During volatile times, this makes it impossible for you to properly calculate your Reward to Risk as you never really know where you will be able to exit a position. This can be a recipe for disaster.

Ultimately, you want to be trading markets with high liquidity and enough volatility to be able to capture some decent moves.

News Risk

Next you want to consider any potential or unforeseen news risk that you may experience when trading. Every security is susceptible to news risk but some more than others.

Individual stocks are going to have some of the highest news risk when compared to trading an entire Index or a Currency which are more effected by macro events.

Volatility

Volatility refers to the amount you can expect a securities price to move. The higher the volatility the wider the range. Most trading strategies benefit from higher volatility. If a security isn’t moving, typically a trader will get chopped up.

There are trading strategies that benefit from low volatility using options but most day traders, especially if you’re new to trading, look for markets with higher volatility.

Other Advantages/Disadvantages

Certain securities have additional benefits over others such as the ability to short at any give time, potential tax advantages, and more.

Penny Stocks

Liquidity – Penny stocks are some of the lowest liquidity securities you can trade. This eventually will put a cap on your earning potential.

News Risk – Penny stocks have very high news risk and are often halted. A lot of traders become victims of the classic pump and dump.

Pump and Dump Penny Stock

The chart above of MGT, now MGTI, is a classic example of a pump and dump. You can see price rose over just a few days doubling the value of the company in January and again in March and then selling off to new lows.

Volatility – As seen in the example above, penny stocks are extremely volatile. Veteran traders may see this as an advantage but for newer traders this typically spells to an account with no money.

Other Advantages

  1. Due to the increase in algorithms in the markets over the last 10 years market transparency has greatly diminished. However, I still believe Level II quotes still provide a slight edge when trading penny stocks as compared to mid or large cap stocks.

Other Disadvantages

  1. The low price of penny stocks partnered with high volatility can allow traders with small accounts to hit big winners. Yes this can be an advantage, but the opposite holds true more often in that traders will be over leveraged and take huge losses.
  2. Penny stocks can also be hard to borrow meaning you may not be able to take a short position limiting you to only long positions.
  3. Finally, penny stocks fall under the pattern day trading rule established by FINRA limiting the number of trades you can take per week if you have an account balance under $25,000.

Conclusion

Penny stocks rank at the bottom of my list when consider the best markets to day trade.

There are some very successful traders that trade penny stocks such as the very well know Timothy Sykes. His performance speaks for itself.

However, even Tim’s upside is capped due to liquidity issues when trading penny stocks. Not to take anything away from Tim as he is a great trader, but when I think of great traders I personally have worked with, they make in a year what Tim has made in his entire career.

Options

Liquidity – Similar to penny stocks, liquidity can be a problem with options depending on the underlying asset your trading. Some index options have decent liquidity but spreads can still be fairly large when compared to futures.

News Risk – News risk can be lower than penny stocks or individual stocks with options depending on the underlying asset. If you are trading index options you odds of significant news risk are much lower than individual stocks.

Volatility – Option volatility can be high depending on the underlying asset.

Other Advantages

  1. Options offer increased leverage.
  2. Index options typically have decent liquidity.

Other Disadvantages 

  1. Options are much more complex securities to trade when compared to other securities due to having to consider components like time decay.
  2. Fall under Pattern Day Trading Rule

Conclusion

Options traditionally haven’t played that large of a role in the day trading arena but they are becoming more popular. I tend to stay away from them when day trading as price movement can be dampened due to the time value element of an option as well as larger spreads when compared to trading an individual stock.

Although I don’t recommend them for day trading, options do have value especially when investing. Most new traders are scared of options due to some of their unique components, but in reality they aren’t that complicated.

Forex

Liquidity – The Forex Market is the most liquid market in the world trading upwards of 5 Trillion Dollars per day.

News Risk – News risk is greatly diminished when compared to other markets. Currencies are obviously susceptible to macro news events but nothing in terms of the volatility when compared to individual stocks.

Volatility – Having a number of major currencies to choose from such as the Pound, Yen, or Euro you can generally find great opportunities.

Other Advantages

  1. The foreign exchange is a 24 hour market.
  2. No Pattern Day Trader Rule
  3. Low Commissions

Other Disadvantages

  1. Low Transparency

Conclusion

Forex is one of the best market for new traders. The main downfall is the light regulation on Forex Brokers in terms of capital and margin requirements. One of the main reasons new traders fail is due to improper money management and having access to huge leverage doesn’t help.

I currently don’t trade Forex anymore due to the fact that Currency Futures offer a much better tax advantage for U.S. traders.

Futures

Liquidity – Extreme liquidity especially when trading eMini S&P 500,eMini Euro Futures, and eMini Crude Oil Futures.

News Risk – Similar to the Forex Market, news risked is mitigated and futures are primarily effect by macro events.

Volatility – A number of volatile markets with very low correlations provide good opportunities for day traders.

Other Advantages

  1. 24 Hour Market
  2. Not subject to Pattern Day Trading Rule
  3. Tax Advantages for U.S. Traders – 60% of income taxed at long term capital gains (15%) and 40% taxed at short term gains (35%). Please consult with your accountant.

Other Disadvantages 

  1. Low Transparency

Conclusion

The futures market is my primary market of choice. If it wasn’t for the tax advantages of futures are probably would focus primarily on Forex. However, the tax advantage lowers my effective tax rate down to 23% which is enough of a deciding factor for me.

Similar to options, a lot of new traders think futures are confusing or have some mystical concept when in reality futures are quite simple to understand.

There you have it, a complete review of the best markets for day trading. Hopefully this helps you understand the advantages and disadvantages of every market when considering what you will trade. Have you traded any other markets? If so share you’re experiences!