Chart-Formations.com

Market Strength Indicators

The term Market Strength is a little ambiguous. It may refer to refers to the broader market rather than single stock or commodity; but it may also refer to the strength of a particular trend of a given stock or commodity. The former may refer to a market index, such as the Dow Jones Industrial Index (DJI) or the number of advancing and declining stocks in a market; while the latter takes volume or open interest into consideration.

The advance/decline line and TRIN are popular Market Strength indicators for the broader market. The popular Market Strength indicators that can be used for individual stocks and commodities include On Balance Volume (OBV), Accumulation/Distribution Line (ADL), William's Accumulation/Distribution (WAD), the Money Flow Index (MFI), and Price By Volume (PBV).

Wealth Warning

Trading equities, options, derivatives, currencies and cryptocurrencies, commodities or any other financial security can offer significant returns BUT it can also result in significant losses if the market moves against your position. It requires a strong commitment to skill development, knowledge acquisition, and emotional control. It should be treated as a business with a clear business plan, proper risk analysis, and a defined set of attainable goals. The risk associated with trading the vagaries of the stock markets is probably the most important consideration as it has a profound effect on a trader's emotional control. You should not trade the stock markets with money you cannot afford to lose as there is considerable exposure to risk in any stock market transaction.

Furthermore, the past success of any trading method, strategy, or system is only indicative of future success. Under no circumstances should past success be misconstrued as a guarantee of future success!

Unless otherwise specified, the trading systems and strategies discussed on this website are intended for educational purposes only and are not meant to recommend or promote any trading system or strategy. You are expected to do your own research and testing to determine the validity of a trading method, system, or strategy on the market and instrument you wish to trade.