Define: Advance Decline Ratio

UK Accounting Glossary

Definition: Advance Decline Ratio



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Full Definition of Advance Decline Ratio


The Advance/Decline Ratio is the ratio of the number of advancing issues to declining issues for a given stock exchange such as the NYSE or Nasdaq.

The Advance/Decline Ratio is similar to the Advance/Decline Index in that it displays market breadth.

But, where the Advance/Decline Index calculates the difference between the number of advancing and declining issues, the Advance/Decline Ratio divides the values.

The Ratio, unlike the  Advance/Decline Index, remains constant regardless of the number of issues that are traded on the New York Stock Exchange (which has steadily increased).

Advance/Decline Ratio Calculation

The Advance/Decline Ratio is calculated by dividing the number of advancing issues by the number of declining issues on a specific day or time period.

A moving average of the Advance/Decline Ratio is often used as an overbought/oversold indicator. The higher the value, the more “excessive” the rally and the more likely a correction. Likewise, low readings imply an oversold market and suggest a technical rally.  Day-to-day fluctuations of the Advance/Decline Ratio are often eliminated by smoothing the ratio with a moving average.

Advance/Decline Ratio is an overbought/oversold indicator.

Not all charting sites support advancing and declining issues.


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Definition Sources


Definitions for Advance Decline Ratio are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 23rd March 2020.