Description
The Trin is not really an indicator (in the sense of moving averages), but it can be used as an indicator when day trading. The Trin is one of the market internals, with the Ticks and Tiki being the other two. The Trin compares the volume of the advancing and declining stocks on the NYSE (New York Stock Exchange), and calculates a ratio showing which stocks (advancing or declining) have more volume.
The Trin is based upon the stocks that are traded on the NYSE, so it is primarily (actually almost exclusively) used as an indicator for the US markets, but the same principles and formulae can be applied to the European and Asian markets.
The Trin can be displayed as a single line, or as a bar chart, but it is always displayed on its own chart, separate from the price bars, and is shown as a bar chart in the example chart (view full size chart).
Calculation
- Description : The Trin (T) is a comparison of the volume (V) being traded for advancing and declining stocks (AD).
- Calculation :
AD = Advancing Stocks / Declining Stocks
V = Buying Volume / Selling Volume
T = AD / V
Trading Use
The Trin shows where the volume is within the market. If there is more volume for the advancing stocks, the Trin will be below 1, and if there is more volume for the declining stocks, the Trin will be above 1. As the Trin can be displayed as a bar chart, it can be interpreted like a price bar chart, using concepts such as support and resistance and trend lines. The Trin can be used independently, or as part of a larger trading system.
