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I follow the TICK, TRIN, VIX & GUT.  See definitions below.
I started out buying mutual funds, subscribed to a mutual funds newsletter and consistently got 18 to 20% return per year.

Later, I read about and investigated futures, options, etc.   Several years ago I attended some seminars, studied and started trading stocks and then stock options.   I purchased stocks and sold calls on the stocks I purchased.   I was successful for awhile and then found myself holding nothing but bad stocks.   I had been called out of all of the good stocks (because they had risen in price) and I was left holding the dogs (because their prices had fallen.)    I also tried trading equity (stock) options, puts and calls.  

Then I discovered the S&P 100 index options (OEX).   The OEX is a combination of 100 stocks traded on the various exchanges and the OEX moves with the market.   The OEX is not tied to good or bad news of one company - if I can read the market, I can make money.   This is what I have done for several years.

This has been an expensive learning process but I am now making money.   - often small amounts of money - and, in the process, Learning what probably works and what probably doesn't work.

My goal is to consistently make $500/day.

Quoted from the Chicago Board Options Exchange web site http://www.cboe.com/  
 
"OEX Basic Review 

OEX is the symbol for options on the S&P 100 Index. This is a capitalization-weighted index, covering a broad-range of industries. 

Each index option contract represents 100 times the current value of the index. For example, when the index is 400, the dollar value of the index will equal $40,000....100 (the multiplier) times 400. 

OEX option premiums are quoted in a manner identical to equity options, stated in points and fractions, the prices are multiplied by $100 to determine total cost. If the option price in the newspaper is 5, the premium is $500. Exercise, or strike prices, are set at five point intervals to bracket the current value of the S&P 100 Index. 

OEX options are American Style. This means they can be exercised on any business day prior to  expiration date. OEX options, available in each of the four nearby months, expire on a monthly basis. The expiration date is the Saturday following the third Friday of the expiration month. 

Settlement value is tied to the S&P 100 at expiration or to the value of the index when the option exercised. This value is calculated by Standard and Poor's. OEX options are cash-settled. This means that cash is delivered at settlement, not securities. 

The index consists of 100 blue-chip stocks from diverse industry groups, and because of this it provides a measure of the overall market performance. 

Therefore, you can participate directly in the blue-chip market by using OEX options. 

For additional information refer to the OEX FAQ located http://www.cboe.com." 
 
You can view the stocks that make up the S&P 100 (OEX) at the CBOE site: 
S&P 100 LIST
 
 

 VIX = CBOE MARKET VOLATILITY INDEX 

The Market Volatility Index (VIX) is calculated by the Chicago Board Options Exchange and it is a measure of stock-market volatility widely followed by investors.  It is a "market sentiment" indicator and it indicates shifting moods of the market which may indicate where prices will head.  The difficulty is anticipating when the index will change direction.  More attention should be paid to the direction of the movement of the VIX rather than its absolute number. 

VIX is best when it spikes; you are generally close to the maximum of the current run and things should start going the other way.  Volatility by definition can not stay at the extremes, it will tend to move toward the average. 

The VIX is based on premiums paid for the CBOE's options on the Standard & Poor's 100 index (OEX).  At a reading of  22.75,  the VIX essentially is predicting the market will rise or fall by 22.75 percent over the next 12 months. 

Thomas Ascher, the CBOE's vice chairman, has cautioned that... "the VIX's value comes in measuring volatility, not future stock prices." 
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From the Chicago Board Options Exchange web site http://www.cboe.com/ 

"CBOE Market Volatility Index 

In 1993, the Chicago Board Options Exchange introduced the CBOE Market Volatility Index. The CBOE Market Volatility Index, known by its ticker symbol VIX, measures the volatility of the U.S. equity market. It provides investors with up-to-the-minute market estimates of expected volatility by using real-time OEX index option bid/ask quotes. 

The VIX is calculated by averaging S&P 100 Stock Index at-the-money put and call implied volatilities. The availability of the index enables investors to make more informed investment decisions. " 
 
 

TICK is a market indicator based on the number of stocks whose last trade was an uptick or a downtick.  NYSE stocks up vs stocks down ratio.  Used as an indicator of market sentiment or psychology to try to predict the market's trend.  Can be found on most quote services. 
  TRIN:    The following is from the web site: http://www.wsdinc.com/glossary/g115.shtml  

"Arm's Index (TRIN) ARMS INDEX (also known as the TRIN) named after originator Richard Arms. 

This is a volume based indicator which looks at market strength and breadth and simply states whether the stocks gaining in price or those dropping in price are getting the greater share of market activity (volume). 
 

An ARMS value of 1 indicates that the ratio of up volume to down volume is equal to the ratio of advancing issues to the declining issues and the market is in a neutral condition. A neutral condition simply means that the up volume is equally distributed over the advancing issues and that the down volume is equally distributed over declining issues for the day. 

This indicator, although simple in its formulation, requires much study in its application. There are many variations applied to the TRIN. Many analysts use a 10-day moving average of TRIN as an indicator. A reading of less than 1.0 usually indicates a bullish demand while a reading greater than 1 can signify a bearish market condition. It must be kept in mind that the indicator behavior and its reading and interpretation depends on whether the market is in a bullish or bearish phase. The actual time duration of this market phase must also be considered. Do not attempt to make and buy or sell decisions based on movements of this indicator by itself. 

This index is based on the concept that greater market volume associated with rising prices indicates market strength while market weakness is generally associated with greater down volume and a greater number of 
declining issues. " 

This is the TOAD's very own "navel" indicator.  When the spot behind the belly button says "buy" or "sell" confirming the other market indicators. 
  There have been numerous requests to learn from the TOAD.  For more information, use the link on the first page or click here to go to "Training by the Toad." 
  The following is a quote from the Day Traders On-line   web site: http://www.daytraders.com/trade.html  
 
"Before you read this page, take about $10,000 in crisp, brand new one hundred dollars bills out into the back yard and pour lighter fluid all over them and then strike a match. Don't burn your money just yet, but stand there and always remember that at any given time, when you are day trading for a living, you are risking probably that much money or more and it may be in as much risk. Our analogy is fairly accurate and if that bothers you, then perhaps you might consider another line of work, because I don't know any GOOD day traders that haven't seen at least $10,000 go up in a puff of smoke during market hours and their learning process (and you thought college was expensive!).

So put away the match and let us help you save a few thousand dollars on your day trader education. In the following text we will try to impart some of the knowledge we have acquired while day trading for a living:"

For the Trading Strategies, click here "Trading Strategies" 
 

 Past performance is no guarantee of future returns. 
 Email the Toad.


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