Participating in the financial markets with a goal of short term profits can be stressful for traders that aren’t sure how to stay on the right side of the market. We’re going to outline three useful tools many veteran trader utilize to keep them on the profitable side of the market.

NYSE Tick

Day traders and quick draw micro scalp traders all know the value and usefulness of the NYSE TICK when determining the short term direction and mood of the market. Used specifically as a barometer, a quick glance at the TICK can reveal very important information since it is generally utilized to gauge the market as a whole, rather than individual stocks or futures contracts.

When the market is bullish the TICK will reveal that more stocks are ticking up rather than down. For example: When the TICK reads plus 300, it is telling the trader that 300 more stocks are moving up, or up ticking than down ticking, which is obviously a bullish indication of the overall market. In contrast when the TICK is minus 300, the trader knows sellers are dominate and entering a long position is not a wise choice.

The TICK will at time exhibit extreme market conditions when it registers a reading over the 1000 point, both plus and minus. When the TICK approaches the plus 1000 mark, the market is considered to be severely overbought and a pull back is highly possible as bulls take profits. Although the plus 1000 threshold is generally considered to be overbought territory, it does not mean the current upward trend has been terminated. In fact, odds favor that the market may continue higher once a re-tracement to recent minor support has been touched with the market bouncing and again continuing it’s trend upward. The opposite is also true when the market is downward trending and the TICK reaches extreme oversold conditions at the minus 1000 mark.

The TRIN, also known as the ARMS Index is an indicator that helps market players determine the internal weakness or strength of the market by measuring volatility through the flow of volume. The TRIN works in contrast with the TICK in is has a inverse relationship with the NYSE TICK whereas a rising TRIN signals that bears are in control of the market as the TICK heads south to negative territory. When the TRIN is falling, the bulls are in control as the TICK heads into positive territory.

The TRIN calculates the internals of the market comparing advancing issues with declining issues through advancing and declining volume. The TRIN determines if more volume is flowing into advancing or decling issues within the market where it derives it’s reading. Therefore, the trader knows if the TRIN is registering above 1.0, the bears are in control of the market and any long positions should be quickly exited upon any sign of stalling since the prevailing trend is down. On the opposite side, if the TRIN is registering a reading of 1.0 or lower, the trader understands that bulls are in control at this point and any short positions should be monitored closely since the trend is up.

It has been said, place a ring in a bull’s nose and it can be lead in any direction. So it is with the S&P 500 Index Futures. These index futures are the ring in the larger market’s nose. Whichever direction the S&P 500, or ES futures go, the market will follow. Whether day trading stocks or scalping DOW emini contracts, every short term trader should have one eye on the ES futures. Bulls may be enjoying a upward moving day, having kept the bears at bay all day as the market moves ever upward.

However, if the S&P futures begin to show signs of weakness, it is time for the bulls to consider scaling out of long positions since a reversal may be about to happen. The S&P futures market sets the tone for the day many times in the pre-market, quickly moving in one direction or another at the opening bell. Trading without monitoring these futures is almost like driving an automobile while blindfolded.

All three of the above indicators can be utilized by both stock and futures traders to monitor sentiment, strength and weakness of the market and general mood of the overall market. By employing all three, the trader is in better position to execute trades that are on the right side of the market which improve their chances of profitable trades. Learn more at emini signals.