Herrick Payoff Index

The Herrick Payoff Index is a commodity futures trading tool, useful for the early spotting of changes in the direction of price trends. The Payoff Index is best used to distinguish futures trends that are destined to continue from those that will most likely be short-lived. The Herrick Payoff Index tends to give coincident signals within a day or two before a significant change in a commodity price trend. This advance action is accomplished through use of trading volume and contract open interest to modify the price action. Analysts have observed that volume trends often change before a price-trend change. There are also generally accepted relationships between the price trend and the trend of open interest.

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