The Arms Index (TRIN) is a type of market indicator used by technical analysts. This indicator is used to gauge the breadth of the overall market. It can be used for short time periods or long time periods effectively. It is referred to as the Arms index because it was created by Richard Arms. 

The Arms Index (TRIN)

In order to calculate this index, you have to follow a basic formula. You take the advancing issues in the market and divide that number by the declining issues in the market. The resulting figure will be the numerator of the final equation. For the denominator, you take the volume of advancing issues and divide that by the volume of decreasing issues. Then take the top number and divide it by the bottom number.

What It Means

Simply calculating this number will not tell you much. You need to understand how to use it to your advantage. If the number equals 1, this means that the market is perfectly in balance. If the number is greater than 1, this means that the majority of the volume in the market is going into stocks that are decreasing in value. A number less than 1 means that the volume is moving upward.

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