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Chapter 7. Volume Extremes, Volatility, ... > TRIN: An All-Purpose Market Mood Ind...

TRIN: An All-Purpose Market Mood Indicator

TRIN, also referred to as theShort-Term Trading Index or the Arms Index (after its inventor, Richard W. Arms Jr.),was introduced in Barron’sby its inventor in 1967. A fuller discussion of the indicator is available in the 1989 book The Arms Index (TRIN Index): An Introduction to Volume Analysis, by Richard W. Arms.

TRIN is a popular indicator that many traders use to monitor forces associated with accumulation (buying) and distribution (selling) pressures in the stock market. It can be applied over very short periods of time, even for day-trading purposes, or for longer periods of time, as a measure of buying and selling pressures in the market. In my own experience, I have not found TRIN to be a precise indicator, but have found its patterns to be often useful in reflecting changing market sentiment, particularly periods of extreme pessimism often associated with stock market buying junctures. For the most part, TRIN appears more useful as a bottom-finding tool than a top-defining indicator, which is not unusual for stock market indicators because stock market bottoms tend to be more readily defined than tops.


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