Since 1967 the TRIN index or arms index as it is sometimes used for the measurement of market power. At the time, was a revolutionary idea to use two non-variable values to determine the strength of the market in a given time. Today, whether the market is a bear or a bull can be made using the index finger TRIN. TRIN data is available for purchases both NASDAQ and NYSE.
TRIN index uses a formula that divides the quotient of advancing issues over declining issues from the quotient of declining volume over advancing volume. Themes represent the number of stock increases or decreases in value and volume represents the totality of the increasing or decreasing stocks are traded. The result is the number, either above or below them.
Understanding of the problems with TRIN index
1. the TRIN is not a natural value. If buying and selling is equal to the value is one; If more sale occurring value is more than one; and buying more would be a value below one. Thus, a high number must indicate a growing market and vice versa.
2. With a neutral point, values above one are integers and below a fraction of one. Therefore, the market seems balanced and a chart is displayed with high voltage spikes and shallow drops, which is not necessarily indicative of the market to sell and buy.
3. While traders average usually index TRIN during certain periods, the data that leads to a misleading, because the one-sided data used.
With a few adjustments to your charting software, a better indicator of TRIN can be made to provide a value indicator is more accurate when the average and easier to interpret market trends. Reverse simply value NYSE TRIN so negative is positive and vice versa and multiply by 100.
When the mathematical data changes are easier to interpret, and is a better indicator of trends in the market, especially when the average. Neutral is 0 (by buying and selling equal) and values is between-100 and 100. Positive values indicate buy and negative values denote sale. So a value of-10 and + 10 is obtained by the same amount of trading, if you sell or buy, providing a better method for indicating power market.
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