VIX and TRIN indeces

CHARTY

Active member
119 1
Does anyone use them? I use the VIX index. It was very intresting yesterday, a very high reading at the opening, confirming the extreeeeeme nervousness of the market, and a fall from that reading during the day..hinting that the makets were getting more sedate!
What about the TRIN index, anyone using it? What is this index actually telling us?
Any help appreciated in advance.
Charty
 
I have been looking at volatility recently and appreciate its usefulness in identifying market tops and bottoms. Although there do seem to be different views about what happens when!

I'm not sure which of the following indicators is called VIX:

Chaikins Volatility
Wilders Average True Range

Bollinger Bands are also a measure of volatility with the moving standard deviations reflecting volatility and constrict before a big move.
 

Hibble

Junior member
17 0
TRIN

Only for the Market Type ticker Charty, and usually alongside A/D Indicator and A/D line. Here is the what AIQ had to say about it:


Traders Index (TRIN)

Note
The Traders Index can be displayed only on charts of market type tickers.

An indicator developed by Richard Arms, the Traders Index (TRIN) is the ratio of advancing issues versus declining issues divided by the ratio of advancing volume versus declining volume. It is a measure of the breadth of the participation in the market.

A value of 100 for this indicator means that the market trend is moving in a balanced way. That is, the up volume for the day is about equally distributed over advancing issues; and the down volume for the day is equally distributed over declining issues. This balance can occur in an up-trending market, down trending market, or lateral market. It simply means that the entire market is participating in whatever direction the market is moving.

When the Traders Index moves away from 100, it indicates that the market is moving into an unbalanced condition, signalling a possible change in direction. As the value of the Traders Index decreases below 100, it is an indication that volume is distributed over fewer and fewer issues and it is a signal of a market top. It means that fewer issues have sufficient perceived value to attract buyers -- more and more issues are fairly valued or overvalued, and fewer issues are undervalued sufficiently to attract buyers. The market is unbalanced on the high side, and a market top is signalled.

When the value of the Traders Index is greater than 100, it again signals that volume is moving in fewer securities, but this time on the down side. Fewer issues are perceived to be overvalued, and thus fewer are available for sale. As fewer issues are being offered for sale at current prices, prices tend to stabilize and a market bottom is signalled.

The Traders Index is computed as an exponentially smoothed average with a smoothing factor of 18%. Empirically, it has been determined that 75 or lower indicates a market top, and 120 or higher indicates a market bottom. Compared to other indicators of this type, the Traders Index is upside-down. From an engineer's point of view, it probably should be flipped over. Historically, however, this is the way the Traders Index has been displayed and AIQ will continue with the convention.

On the Traders Index plot, the upper horizontal line is 120 and the lower horizontal line is 75. These numbers are, historically, good dividing points for signals. The 120 line indicates an oversold condition and the 75 line indicates an overbought condition. When the Traders Index is at either line, a trading opportunity is signalled.

Look for the number of days that the Traders Index remains at one or the other of the extreme values. The Traders Index tends to be a leading indicator, sometimes giving a signal two or three weeks prior to the actual market turnaround. Also, there are times in extremely trending markets when the indicator will give false signals.

And the equation for the programmers:

 
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