Glossary of Terms>A>Advance Decline Ratio

Along with the Advance-Decline line, the Advance Decline Ratio is considered one of the best indicators of the overall wellbeing of the market. The AD Ratio is calculated by dividing the number of advancing issues by the number of declining issues. It is similar to the Advancing-Decline Line in that it displays market breadth, but where the Advancing-Decline Line subtracts the advancing/declining values, the A/D Ratio divides the values. Taking the moving average of the AD ratio will smooth it so it can be used as an overbought and oversold indicator.

Chart courtesy of Prophet Financial Systems (www.prophet.net)

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