The Tick Index is a technical indicator used to measure the momentum of stocks or other securities. Developed by Joseph Granville in 1930s, this indicator has been widely adopted by traders and investors seeking to gain insights into market trends.
How does the Tick Index work?
The Tick Index is calculated based on the number of ticks (or price changes) in a given time period. A tick is defined as a 1/8th movement, or $0.125 per share. The index is then plotted against time to visualize its trend and patterns.
There are three main types of Tick Index readings: positive, negative, and zero. Positive readings indicate an uptrend, while negative readings suggest a downtrend. A zero reading indicates neutral market conditions.
Key aspects of the Tick Index
The Tick Index is sensitive to changes in volume and price movement. It's essential to consider these factors when using this indicator in your trading strategy.
Some traders also use the Tick Index in conjunction with other technical indicators, such as moving averages or RSI, to confirm market trends and make informed decisions.