Upside/Downside Ratio

DEFINITION of 'Upside/Downside Ratio'

A technical indicator that shows the relationship between the volumes of advancing and declining issues on an exchange - in particular, the New York Stock Exchange. The upside/downside ratio is used to determine the momentum of the market at any particular time.


The ratio is calculated as follows:


Advancing Issues / Declining issues


Where


Advancing Issues = Total volume traded of securities that closed above their opening price Declining Issues = Total volume traded of securities that closed below their opening price

BREAKING DOWN 'Upside/Downside Ratio'

The upside/downside ratio is often smoothed using a standard moving average or other type of moving average to filter out smaller, less significant movements. Values greater than 1 are generated when more issues are advancing than declining, in terms of volume. Values less than 1 are created when more issues are declining than advancing, in terms of volume. The upside/downside ratio is often used to gauge over-bought and over-sold conditions in the market. Low values can indicate that the market is becoming over-sold and high value can demonstrate that the market is becoming over-bought. The upside/downside ratio is available as a technical indicator on many trading platforms.

RELATED TERMS
  1. Bear

    An investor who believes that a particular security or market ...
  2. Volume

    The number of shares or contracts traded in a security or an ...
  3. Upside

    The potential dollar or percentage amount by which the market ...
  4. Advance/Decline Line - A/D

    A technical indicator that plots changes in the value of the ...
  5. Bull

    An investor who thinks the market, a specific security or an ...
  6. New York Stock Exchange - NYSE

    A stock exchange based in New York City, which is considered ...
Related Articles
  1. Trading Strategies

    3 Key Signs Of A Market Top

    Learn the best ways to foresee market corrections and how to profit from them.
  2. Active Trading

    Accumulative Swing Index And The McClellan Oscillator

    These indicators serve as confirmation for those of us who need to double check our findings on a regular basis.
  3. Active Trading Fundamentals

    Market Breadth: A Directory Of Internal Indicators

    Discover the indicators that measure the force of the bulls and bears, telling you what a simple price chart cannot.
  4. Chart Advisor

    How Are You Trading The Breakdown In Growth Stocks? (VOOG, IWF)

    Based on the charts of these two ETFs, bearish traders will start turning their attention to growth stocks.
  5. Economics

    The History of Stock Exchanges

    Stock exchanges began with countries who sailed east in the 1600s, braving pirates and bad weather to find goods they could trade back home.
  6. Chart Advisor

    Breakout Opportunity Stocks: CPA, GNRC, WWE

    After a period of contracting volatility, watch for breakouts and bigger moves to come in these stocks.
  7. Chart Advisor

    3 Charts That Suggest Now Is The Time To Invest In Real Estate (VNQ, SPG,PSA)

    Real estate assets have some of the strongest uptrends around. We'll take a look at three candidates poised for a move higher.
  8. Chart Advisor

    Stocks With More Upside Due to Bear Traps (TAP, SPY)

    A bear trap is a pattern that typically leads to at least a short-term rise in prices. Here are stocks exhibiting the pattern.
  9. Stock Analysis

    3 Risks U.S. Equities Face in 2016

    Find out why the probability of a U.S. stock bear market is increasing in 2016 and what the greatest risks are to the bull market that is almost 7 years old.
  10. Active Trading Fundamentals

    New Traders: Trade the Market in 5 Steps

    New traders shouldn’t throw money at securities without knowing why prices move. Follow these five steps to tilt the odds in your favor.
RELATED FAQS
  1. Why is the Upside/Downside Ratio important for traders and analysts?

    The upside/downside ratio is an important technical indicator for investors and analysts because it is used to show market ... Read Full Answer >>
  2. What is a common strategy traders implement when using the Upside/Downside Ratio?

    Traders can utilize the upside/downside ratio to identify profitable points for adding to their stock portfolio holdings. ... Read Full Answer >>
  3. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
  4. What is after-hours trading? Am I able to trade at this time?

    After-hours trading (AHT) refers to the buying and selling of securities on major exchanges outside of specified regular ... Read Full Answer >>
  5. What are some of the most common technical indicators that back up Doji patterns?

    The doji candlestick is important enough that Steve Nison devotes an entire chapter to it in his definitive work on candlestick ... Read Full Answer >>
  6. Tame Panic Selling with the Exhausted Selling Model

    The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
Hot Definitions
  1. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  2. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  3. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  4. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  5. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
Trading Center