Advance decline indicator

Advance Decline Group - A / D Ratio - Breadth-Thrust index BTI

The advance/decline line is the most popular of all internal indicators by far. It is a very simple measure of how many stocks are taking part in a rally. At this point, two more indicators from the segment of the Advance Decline group will be presented. ADG indicators measure the number and volume increased, and killed (depending on approach), the unchanged values ​​of a particular market or index. Basically it can be stated that market-wide indices are indicators for this group is more suitable as indices, with few members (keyword DAX 30).

One of the indicators that give you an idea on what has happened during the trading day is advance/decline ratio. Quite common - despite limited explanatory power the A / D ratio is. As can be seen the name (long form Advance / Decline Ratio) can be, these are the difference between high and fallen stock prices in a given observation period. Since the indicator value is virtually unusable in its basic form also a smoothing component is introduced, which makes the whole thing look a little better. As far as the interpretation is basically said to the other A / D approaches, in terms of formula sees the Indikatorermitttlung as follows:

A / D - Ratio (t) = Sum (n) (AdAdv / AdDec) / n


This number is used to calculate the "traditional Summation Index. Ratio-adjusted Net Advances equals Net Advances divided by advances plus declines. Based on the ratio of increased values ​​and the total number of index members, we come to the Breadth-Thrust Index (BTI). Also here is a smoothing rather than with the goal of better usability, common settings for the smoothing component in this context, five or ten days. Depending on the approach gets the index of readability, because often even donated two extreme zones, which then imply the rather simple interpretation: Basically high indicator values ​​indicate a bull market that have low contrast, the Bears call the shots. As for the two extremes zones can be accepted at the top of an index overbought, oversold in the lower accordingly. The mathematical side is as follows:

BTI (t) = Sum (n) (AdAdv (t) / (AdAdv (t) + AdDec (t))) / n

The Advance-Decline Line is the most cited and least understood of all market indicators. A small modification of the BTI indicator by using a different smoothing component (here, 21 days) is the Stix. Because of this longer period smoothing effect of the indicator is a little soft, otherwise it is being said.