Description
Arms Index, also known as The Trading Index (TRIN), is a breadth oscillator that aids in the measurement of internal market strength or weakness.
How this indicator works
TRIN is a short-term trading tool that measures volatility in the stock market. TRIN represents the relationship between advancing and declining issues by measuring their volume flow. A rising TRIN depicts a weak market and a falling TRIN depicts a strong market. A moving average can be added to smooth the data.
Calculation
Advancing Issues / Declining Issues -------------------------------------------- Advancing Volume / Declining Volume
The TRIN will read under 1.0 when advancing stocks are the major source of volume and above 1.0 when declining stocks are the predominant source of volume flow in the market.