In this blog Global Market Astro
has tried its fullest possibility of explaining the Advance and Decline concept
used in daily market. In addition we have briefed about Advance/Decline line,
Advance/Decline Index and Advance/Decline ratio (ADR)
Advances and Declines
Advances may be defined as the number of stocks
that have closed higher than the previous day’s closing price. Declines may be
defined as the number of stocks closing at a higher price than the previous
day’s closing price. Technical analysts used advances and declines as a tool to
analyse the overall behaviour of the market, volatility and to forecast the
price trends. A market becomes more bullish if more number of stocks advance
than decline.
Advance/Decline Index
Advance/Decline index is a technical
indicator tool that represents the total difference between the number of
advancing and declining stock prices. This index provides an overall insight of
the market on a whole.
Advance/Decline Line - A/D
The advance/decline line is a
technical indicator plotted taking into account the changes in the value of
advances/decline index over a period of time. Each point of advance/decline
line is calculated by taking the difference between the numbers of
advancing/declining stocks and adding the result to the previous period's
value.
Advance/Decline Ratio- ADR
ADR is a market breadth indicator used in technical analysisto compare the number of stocks that closed higher with the number of stocks that closed lower than their previous day's closing prices. Advance/decline ratio can be calculated by dividing the number of advances by the number of declines. The A/D ratio is calculated for various time periods - one day, one week or one month.
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