The Arms Index, also known as TRIN (Trader’s Index), is used to measure overall market sentiment. It compares advancing and declining stocks along with their trading volumes. A TRIN value below 1 indicates bullish sentiment, while a value above 1 shows bearish sentiment. It helps traders understand if the market is overbought or oversold.

What is the Arms Index (TRIN)?

The Arms Index, or TRIN, is a technical analysis tool that measures market sentiment by comparing advancing and declining stocks with their volumes. It tells whether more volume is going into rising or falling stocks. It was created by Richard Arms to gauge short-term market strength or weakness.

How Does TRIN Indicate Market Sentiment?

TRIN tells if the market is bullish or bearish by comparing the number of advancing stocks to declining stocks and their volumes. A TRIN value below 1 means bullish sentiment as more volume is going into advancing stocks. A TRIN above 1 means bearish sentiment as more volume is flowing into declining stocks.

How is the Arms Index Calculated?

The formula for TRIN is:

TRIN = (Advancing Stocks / Declining Stocks) ÷ (Advancing Volume / Declining Volume)

A result below 1 shows buying strength, and a result above 1 shows selling pressure. It combines price movement and volume for a complete picture of market action.

What TRIN Values Should You Watch?

- TRIN < 1: Bullish sentiment, strong buying activity
- TRIN > 1: Bearish sentiment, heavy selling pressure
- TRIN = 1: Neutral market

Extreme TRIN values (like above 2 or below 0.5) may indicate the market is overbought or oversold and a reversal could happen soon.

How Can TRIN Help in Intraday Trading?

Intraday traders use TRIN to confirm the strength of a market move. If prices are going up and TRIN is falling below 1, the rally is supported by volume. If prices rise but TRIN rises too, the rally may not last. It helps traders avoid false signals and make more accurate entries and exits.

Can TRIN Be Used with Other Indicators?

Yes, TRIN works well with indicators like RSI, MACD, and Moving Averages. While TRIN shows overall market mood, these indicators help confirm specific buy or sell signals. Combining them gives a more complete picture and reduces the chance of wrong trades.