The Dynamic Ticker gives a summary of the market participants’ (Market Makers, ECNs and exchanges) recent activity in a stock (i.e. uptick, downtick, refreshed quotes, etc.) by summarizing what has scrolled through the Dynamic Ticker window. In the past, one had to watch for a large number of red or green messages scrolling through the window to get a feel for the momentum of a stock. The Dynamic Ticker takes this burden away from you by counting the messages, separating them by stock, and displaying the overall "redness" or "greenness" of the data for each stock.
There are three types of graphs available depicting Activity Rate, Net Value, and Score. Each of these graphs appears in the window with a Symbol name followed by a numerical value and a bar graph representation of that value. It is important to understand that some of the configurable parameters only affect the aesthetic look of the graphs and not the actual value of these graphs. You can also adjust how far back you want these graphs to watch. More on this follows.
Reading the ticker tape is one of the oldest and most useful trading methods. However, this skill has traditionally been made difficult by three complexities. The first complexity is determining the movement potential of a signal (tick). In other words, quickly deciding if a particular signal represents buy or sell pressure. The second complexity is separating intermingled signals of different stocks from one another. The third complexity involves the difficulty of accurately remembering the flow and direction of signals for extended periods of time, especially when multiple stocks are being tracked.
Tickers were originally designed to simplify the first problem by color-coding the ticker data green or red to indicate buy or sell pressure. However, the separation problem and the memory problem still remained. The graphical tickers are designed to address these remaining two complexities. The graph window tracks the incoming signals for a configurable period of time, separates the incoming signals by stock, and then displays the accumulated data alongside the symbol name. In addition to the digital data display, the window offers a graphical display in the form of a bar graph which makes it easy for you to determine the past activity and momentum of a stock at a glance.
It is important to understand what the ticker signals show. It is tempting to interpret these signals as showing price velocity or in other words, the speed and direction of the price change of a particular stock. However, this is not accurate. The tickers and the graphical tickers only show the amount of price increasing (green) or price decreasing (red) activity that the market participants have been engaged in. Returning to the physics analogy, if price movement is the velocity of a stock, then the market participants’ activity is the potential energy of a stock. Another way of looking at the graphical tickers is like the instruments on a car dashboard. If the speedometer measured the price movement of stock then the graphical tickers act like a tachometer.
Correct configuration of the graphs is crucial for getting clear, reliable signals. The following paragraphs attempt to explain the purpose of each graph parameter and give advice on the proper way to set these parameters in order to achieve clear signals.
There are three types of graphs that can be displayed in the Dynamic Ticker: the Activity Rate, the Net Value, and the Rate Adjusted Value (or Score). Each of these graphs appear as a number followed by a horizontal bar graph either to the right of or just beneath the symbol name in the graph window. The number shows the actual value computed by the particular graph function, while the bar displays a normalized interpretation of the actual value. The actual value is normalized using expected maximums provided by you. It is crucial that you carefully consider the type of filtering and market behavior when setting these maximums in order to achieve visibly pleasing and useful graph displays.
The Activity Rate (represented by R: in the window) graph displays the amount of market participant activity that has occurred for a particular symbol over the last time frame by counting the number of messages that have scrolled through the Dynamic Ticker for that stock. The numerical portion of the graphs displays the actual number of signals that have been printed in the data window. The bar graph displays this same value normalized by some maximum value defined by you with the Max Rate Per Second slide control. For instance, if the graph is set to watch only a minute back and the chart read "ABCD R: 60," it would mean that 60 ABCD messages had scrolled through the window in the last minute (an average of 1 per second). The bar graph color will always be green as this is a simple cumulative statistic. The Activity Rate alone does not show the potential direction of movement of a stock, it only indicates the amount of market interest in a particular stock. Since filtering (via the Market Maker Selector ) tends to decrease the amount of displayed activity in the data window, it is important to set the Max Rate Per Second, to accommodate any filtering.
The Net Value (represented by V: in the window) graph shows the sum of all the signal weights for a particular symbol over the last time frame by summing the green (+1) and red (-1) messages that have scrolled through the window for each stock. The numerical portion of the graph displays the actual sum computed, while the bar graph displays the same value normalized by some maximum value defined by you with the Max Value Per Signal slide control. For instance, if the graph read "ABCD V: 40," it would mean that there were 40 more green messages for ABCD than red messages for ABCD in the last minute (or whatever length of time you set). The bar graph normalization is dependent on the actual number of recorded signals and not on the potential number of signals. If the Net Value is not evaluated in context with the Activity Rate, the bar graph can easily give misleading movement indications. As an example, consider that a symbol has had only one signal in the current time frame. If the value of that one signal exceeds the Maximum Value Per Signal, the bar graph will show 100% even though this is probably not a strong movement indicator. Net Value tends to be misleading in this way for low activity stocks and inconsistent activity rates. Although Net Value can be used as a movement indicator for high activity, constant rate stocks, it is not acceptable as a movement indicator in all situations.
The Rate Adjusted Value, also called the Score, (represented by S: in the window) combines a symbol's Activity Rate and Net Value into a single strength value. This compensates for the unfavorable behavior of the Net Value on low activity stocks and allows the Score to give a much more reliable movement indication. The Score is computed using the formula
score = value * rate
where value is the Net Value,
rate is the Activity Rate, and 
is the rate biasing factor.
The Rate Biasing Factor allows a trader to emphasize or de-emphasize a
stock's rate in the computation of its score. This is a handy feature
when high and low volume stocks are being tracked in the same ticker window.
Setting the bias to less than 1 de-emphasizes the rate difference between
high and low volume stocks and tends to equalize their scores. Likewise,
setting the bias to values greater than 1 emphasizes the rate and increases
the score difference between high and low activity stocks. Of the three
graph types, the score is probably the most accurate indicator of a stock's
movement potential.
The Time Frame specifies how far back the Dynamic Ticker watches. Traders with a short outlook concerned with catching short jumps and turns in the market might want to set this value below 3 minutes. Traders concerned with longer trends can set the time frame up to an hour. The length of time can be set anywhere from 1 second to 1 hour. However, setting this value too low may result in very volatile, "spiky" graphs. Increasing the time frame tends to smooth out these spikes and may reveal longer trends. Set the time frame according to your particular trading style.
Moving Market Speed between Slow and Fast changes the Max Rate Per Second variable in the Advanced window. See Graph Parameters below to see how changing this variable affects the Graphical Display. The default settings for the Dynamic Ticker are geared toward tracking higher volume, more active stocks. To track less active or a mixture of stocks (with different volume and activity), it’s important to thoroughly understand how the Dynamic Ticker works.
The Net Value is calculated by summing the weights of each of the following signals over the specified time frame. The Signal Weights panel is where it is determined how much individual weight the signals have. Here is a list and description of each of these signals.
It may not be necessary to change these weight values unless you wish to place more emphasis on a certain type of event. These events can each be weighted independently for the bid and the ask side. Weights should be chosen to reflect the degree to which each event will influence the market price to increase. It is suggested that these values be set somewhere between -4.0 and 4.0 with a value of -4 signifying an extremely price decreasing signal and a 4 being an extremely price increasing signal.
Market activity is not a constant. Some days and even certain times throughout the day have very different rates of activity, and of course, different stocks have different rates as well. These rate changes will affect the look of the bar graphs so adjustments may need to be made to compensate for this. The following controls, found in the Advanced section of the Graph Settings window.
The Maximum Rate Per Second is a discrete value set by using a slider control that can range from 0 to 4 and controls the look of the Activity Rate bar and the value of the Score. This value specifies the expected maximum number of signals for a single stock in 1 second. This value is used to compute the maximum number of signals in the given time frame, which is then used to normalize the Activity Rate. Any type of filtering (via the Market Maker Selector) affects the rate of signals counted. The Max Rate Per Second should be set to compensate for this filtering. The more filtering that is used, the lower the Max Rate Per Second should be set. Market behavior also affects the rate. If a set of slow moving stocks is loaded into the ticker, the Max Rate Per Second can be expected to be low. Moving the slider to the left will stretch the Rate graph and the Score graph toward the dotted lines. Conversely, moving the slider to the right will shrink the Rate and Score closer to the origin line.
The Maximum Value Per Signal is a discrete value set using a slider control that can range from 0 to 4 and controls the look of the Net Value bar and the value of the Score. The net value is calculated by summing the weights specified for each signal that occurs. The Max Value slider allows you to adjust this range to an acceptable value to produce visually pleasing bar graphs. Moving the slider to the left will stretch the Value graph and the Score graph toward the dotted lines. Conversely, moving the slider to the right will shrink the Value and Score closer to the origin line.
The Rate Biasing Factor allows a trader to balance the emphasis of a stock's rate in the computation of its score when lower and higher activity stocks are shown in the same Ticker. This value is set using the Rate Biasing Factor slider bar, which ranges exponentially from 0 to 4 with 1 being at the center of the slide range. Setting this value to 1 disables the biasing factor because the score function simplifies to Value * Rate. When this value is set lower than 1 and as the value approaches 0, the score of slower moving stocks is amplified until the rate is no longer a factor and the scores of slow and fast stocks are the same. As the value is increased greater than 1, the score difference between slow and fast stocks is exaggerated. If the ticker is loaded with a set of equally paced stocks, then the Rate Biasing Factor is not necessary and could be set to 1. However, if slow and fast stocks are being watched simultaneously, the Rate Biasing Factor can be moved closer to 0 to emphasize the slow movers and balance the scores. This parameter can be set up to 4, but in most cases it should never be set higher than 1.
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