I’ve been asked on numerous occasions how to plot the Cumulative Tick indicator behind the price so I thought I’d post a quick note for those interested. The indicator works as either an upper or lower study. Simply click “On Upper Subgraph” to move the study to the price pane. If this causes a “compression” in your price action, simply uncheck “Fit Studies” in your Style settings.
Note how the Cumulative Tick does a very nice job of spotting trend days and keeping you on the right side of the trade.
Best of luck in your trading,
Eric
. I’ve enjoyed the book thus far and have created a few new indicators as a result. The first is the Cumulative Tick indicator as shown below. This study is designed to run on a 20 day, 5 minute chart of one of the primary futures contracts (/ES, /YM, /TF, /NQ). Each day, the indicator plots the cumulative sum of the NYSE $TICK values. Gutmann uses this chart to determine the type of trading day evolving. The last two days are considered “Unequivocal Trend Days.” The horizontal lines on the indicator represent average values of the cumulative tick at 10:30, 12:00, 13:30, and 15:00 EST. There are separate averages for days with a positive closing cumulative tick and a negative one. By comparing today’s value to the average lines at a given time one can get a sense of the strength of the day’s trend in relation to the historical average. Ideally, we would like to calculate the average value lines over a larger time period than 20 days and a smaller interval than 5 minutes. Gutmann uses a 100 day 1 minute chart for his calculations. Unfortunately, I found the best we could get with TOS was 20 day 5 minute. I’ve also coded up a normalized MACD as described in the book and is shown in the lower image with the Cumulative Tick indicator on the upper subgraph.
