Arms Index Indicator

Arms Index Indicator TRIN - BRIN

On the American market analyst Richard Arms is the width indicator TRIN (Arms Index also known as) back. Market breadth indicators allow the trader to provide a more detailed look at the market activity than is possible with the pure price action. The focus of this approach are information on the relationship between rising and falling of an index members. Since most indexes are weighted nature, there may well be that a higher index value is supported by a few members with strong index weighting. The Martktbreite your side now trying to determine whether a trend as "healthy" can be considered, ie whether it is supported by the majority of market participants.

A detailed picture of the market trying to convey about the Arms TRIN. This
considered not only the increased amount of fallen and market participants, but also the volume of trade involved. Those who are interested in the American market, which should have already determined that the issue of market breadth - in contrast to Germany - great attention is being paid. The lesser popularity in this country is associated with the problem of data collection, the least of course keep market statistics provide data provider as the sum of the increase, and unchanged values ​​fell and trading volumes involved. Who wants to use the Arms Index or a similar indicator has been able to make something so ...

If the concrete significance of the TRIN questions we must first refer to the difficult-to-interpret sawtooth image. Under certain conditions, the indicator shows the tendency to form extreme outliers (for example, with increasing trade volumes and rising number of low values). In the immediate vicinity of these outliers is due to an interpretation of the history of Verzerrrung particularly difficult. Basically indicator values ​​over 1 indicate bearish markets (no upper limit) and values ​​(zero threshold) under one bullish tendencies. Regarded as problematic is the peculiarity that very different market situations associated with the same indicator values, crucial changes in trends are often obscured.


The weaknesses mentioned trying to compensate for the Dutchman Jacobus R. van den Brink, with his well-known as the BRIN development approach outlined. van den Brink leads to this two additional lines on which to facilitate the representation, in practice, this this is the quotient of rising and falling shares and the ratio of the corresponding volumes. In its original form, the approach involves no smoothing component, but it is quite possible moving averages on the various sub-indicators apply.

As for the interpretation, it must be considered individually each sub-indicator. The Vline (volume line) as the ratio of trading volume increased and dead values ​​can be seen in the relative position indicator for the centerline. With predominant volume of trade increased the Vline values ​​above the median line, in the reverse case is the Vline below the centerline. The distance can be regarded as a measure of dominance. A fundamental problem in this context is sometimes encountered in the volume-defining the meaning of numbers dar. To achieve meaningful results and to not have two identical lines must be the product of price and volume quantities are considered. ILine the issue (or line) as a sum of money and rise in shares of an index has fallen can be relatively easy to interpret as interpreted around the concrete quantity of shares traded anything. A layer of iLine below the center line indicates that the number of higher values ​​is higher than the number of fallen, vice versa is the situation at a location above the center line. Again, the distance to the center line measure of the magnitude of the difference.

BRIN even when a position above the center line indicates a positive market position, a position below the other hand, bearish trends. The indicator can thus be regarded as an early warning when a changing market situation may be indicative of possible changes in the price trend. In order to obtain meaningful signals should confirm iLine and Vline the BRIN-interpretation.