Arms Index (TRIN)
The Arms Index, developed by Richard Arms, is also referred to as TRIN, an acronym for TRading INdex. It is a volume-based indicator, which determines market strength and breadth by analyzing the relationship between advancing and declining issues and their respective volume. The Index is calculated using the following formula: (# of advancing issues / # of declining issues) / (advancing volume/declining volume). The result of this formula is then smoothed by a simple moving average, the length of which is an input (SmoothingLength).
An Index value of 1 indicates that the ratio of up volume to down volume is equal to the ratio of advancing issues to the declining issues. The market is said to be in a neutral state when the Index equals 1, since the up volume is evenly distributed over the advancing issues and that the down volume is evenly distributed over the declining issues.
AdvIssues( Close of data1 ) sets the data series where Advancing Issues instrument is inserted.
AdvVol( Close of data2 ) sets the data series where Advancing Issues Volume instrument is inserted.
DecIssues( Close of data3 ) sets the data series where Declining Issues instrument is inserted.
DecVol( Close of data4 ) sets the data series where Declining Issues Volume instrument is inserted.
SmoothingLength ( 4 ) sets the number of bars to be used to calculate the average of the Arms Index.
OverSold( 1.25 ) sets the value specifying an oversold market level.
OverBought( .7 ) sets the value specifying an overbought market level.