Tick Distribution – In Practice

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Hello folks, this is Ralph. And today we’re going to go over how to use the TICK distribution study. So let’s get started if you haven’t already done. So please go ahead and watch the set of video so that you can get set up with the same chart that you’re looking at right now. So we’re looking at a 15 minute chart of the TICK with the TICK distribution study already added to the chart, and I’m going to add the data for the e-mini S&P in a sub graph so that we can see them side by side.

To do that, go and add the additional symbol study.

And I just need to find the symbol for the e-minis. All right. I hit apply. Hit. Okay. And now with the data, we can see how price trades as the TICK distribution is plotting. So I’m only gonna focus on one type of setup today. There’s other things that you can observe by looking at the TICK distribution and price of the e-minis, but we won’t be going into too many today.

So I’m just going to focus on Friday’s trading session. And if I expand this a little bit, You’ll see that, you know, during the beginning of the day, which the market opened right here, we opened positively, right? So two ticks, two 15 minute bars had a positive TICK value. And then we had a tick down, tick up, tick down, and it sort of went back and forth for a good part of the day.

As price store was trading up, up, up, up, up. What was interesting is that through this zone right here, we got a bunch of negative ticks without price, really trading down. And then we got a bunch of positive ticks and not until 30 minutes into the trend that was getting started to the downside. Did we start getting negative ticks.

And I think this is great to see this. In this timeframe of the 15 minute timeframe, but if we zoom in, so now I’m going to change this graph to be a 5 minute chart. You’ll be able to notice the change a lot quicker. So again, I’m showing you from the beginning of the day, you can see that we went back and forth and back and forth in terms of where we were plotting.

And then we consistently started getting positive ticks. Through the zone right here. This is kind of a lone negative tick. And if you zoom in to a, to a smaller timeframe, you can begin to observe whenever we do tick down. And that that’s kind of your first sign that there are, there’s a crack in the market.

There’s a change coming. You don’t know if it’s actually going to manifest itself because more buyers could come in, but you know, if you’re trading along and you’re long thinking that we’re going to break this upper level right here, and now you start seeing negative ticks, you want to stay on your toes.

Maybe you don’t want to get out of your long position just yet. But once we start making A) lower lows, such as this candle right here, And B) start having more consecutive red ticks over five minutes. If you’re not already out of your trade, you should be getting out of your trade. Conversely, if you’re not already in a long position, but you’re looking for a trade or waiting for a good setup and you see this red tick, and then you start seeing more red ticks.

You likely know that there is going to be continuation occurring. And then once you get more and more red ticks, as you’re potentially already short the market, you know that you’re on the right side and then you observe the exact same pattern, but to the upside, right? So now you start getting positive ticks while the market is.

Essentially flat. And then eventually at the very, very end of the day we ramp up. But the TICK was telling you that things again are shifting in the markets and you as a trader need to be trading the data that’s in front of you versus potentially, you know, your feeling or your opinion. So that’s the short little trade that I wanted to go over.

You know, I think it’s more valuable to look at this data in this graph versus just the bubble during these times. But throughout the rest of the day, you know, I, I like to observe how the distribution is stacking up in terms of how many are positive or negative because some days 80% of them will be positive and you just do not want to be short the market.

So, I hope you learn something in this video. If you have any questions, please let us know. And until next time everyone, happy trading!