An Arms index is a chart analysis tool used in technical analysis. It is named after its creator Richard Arms. This index type is used to determine overbought and underbought levels.
In the first step in determining Arms index rates, the number of advancing issues (stocks or other securities issues which are gaining in value) is divided against the number of the exchange’s declining issues (securities issues which are losing in value). In the second step, the total volume of advancing issues is divided by the total number of declining issues. In the third step, the quotient of the first step is divided by the quotient of the second step.
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