Custom Formula Collection
Arms Index (TRIN)
The Arms Index, also known as TRIN, is a market indicator that shows the relationship between the number of stocks that increase or decrease in price (advancing/declining issues) and the volume associated with stocks that increase or decrease in price (advancing/declining volume). The Arms Index was developed by Richard W. Arms, Jr. in 1967.
The Arms Index is primarily a short term trading tool. The Index shows whether volume is flowing into advancing or declining stocks. If more volume is associated with advancing stocks than declining stocks, the Arms Index will be less than 1.0;
if more volume is associated with declining stocks, the Index will be greater than 1.0.
The formula for the Arms Index is:
(Advancing Issues / Declining Issues) / (Advancing Volume / Declining Volume)
To calculate the Arms Index in MetaStockTM for Windows you will need to first collect the four pieces of data.
- Reuters Trend Data (RTD) supplies this data in two files. The tickers are X.NYSE-A (Advances, number and volume) and X.NYSE-D (Declines, number and volume).
- Dial/Data also supplies this data in two files. Advances, number and volume and Declines, number and volume. The tickers are @*NAZ_K and @*NDZ_K.
- CompuServe supplies this data in 4 files. The tickers are NYSEI (Advances)use the cusip 00000157 rather than the symbol;
NYUP (Advance volume) and NYDN (decline volume).
After the data has been collected follow these steps:
For data from RTD or Dial Data
- In the DownLoaderTM create a composite security of the Advances / Declines.
- In MetaStock open the composite.
- Create and plot the custom formula:C/V
- This gives you the Arms Index (TRIN).
For data from CompuServe
- In the DownLoader create the two composites.
- Advancing Issues / Declining Issues
- Advancing Volume / Declining Volume
- Advancing Issues / Declining Issues
- In MetaStock open both composites.
- Tile the charts so they can both be viewed.
- Drag the plot of the Adv. Volume/Dec. Volume composite into an inner window in the Adv. Issues/Dec. Issues chart.
- Create the custom formula:C/P
- Plot this formula on top of the Adv. Volume/Dec. Volume plot (the Adv. Volume/Dec. Volume plot will turn a purplish color to signify the formula will be plotted on it).
You will now have the Arms Index (TRIN) plotted. You can drag it to its own inner window if you prefer.
For interpretation refer to Mr. Arms book, The Arms Index.
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