We use a 1 min chart of NYSE $TICK, which indicates how many issues on the NYSE are upticking at the same time, in much the same way other traders do (topic for another post).  However, we also plot a standard 14 period Volatility indicator (out of the can in TradeStation) and tend not to trade when it’s under 250.  What this measures is how much resistance there is to a move.  If it’s low, that means there is little participation and a trend is unlikely to develop.  Usually, $TICK Volatility begins high, trails off in mid-day and then becomes very strong toward the end of the day.

Adding an alert for the 250 level, then, can be a good way to stay out of chop.  We’ve also added a new alert for the 125 level, which indicates that there is something potentially wrong with order flow in the NYSE.  This level was breached today and June 12, the last time there was a major order flow problem.

We won’t be trading again until after 1:00 pm and until the $TICK Volatility gets above 250 again.