Definition of Arms Index

While its name may suggest it tracks the value of weapons, the Arms Index is a short-term trading indicator, showing the relationship between the number of stocks increasing or decreasing in price and the volume of trades associated with these. Named for Richard Arms who created it in 1967, it is also known as the Trading Index or TRIN.

The Arms Index is a short-term indicator displayed when markets are open.  It shows whether trading volume is flowing into advancing or declining stocks, where greater volume flowing into advancing stocks suggests a bullish attitude (it produces a ratio or less than one), while volume flowing into declining stocks indicates a bearish attitude (producing a ratio of more than one).

The TRIN is calculated by dividing the advance /decline ratio by the upside/ downside ratio. [1]

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