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Measure the Volatility Levels in Market with the Help of Absolute Breadth Index

Norman G. Fosback introduced a much known and frequently used technical index, Absolute Breadth Index. Norman G. Fosback has described a very useful technical indicator in his book “stock market logic”, namely, Absolute Breadth Index.

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Measure the Volatility Levels in Market with the Help of Absolute Breadth Index

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  1. Measure the Volatility Measure the Volatility Levels in Market with Levels in Market with the Help of Absolute the Help of Absolute Breadth Index Breadth Index

  2. Norman G. Fosback introduced a much known and frequently used technical index, Absolute Breadth Index. Norman G. Fosback has described a very useful technical indicator in his book namely, Absolute Breadth Index. The abbreviation used for the technical index is ABI, which is used to measure the volatility levels in the market. This technical index is used as a market momentum indicator. This technical indicator is calculated by subtracting the absolute values of declining issues from advancing issues. The indicator reflects the activity, volatility and changes taking place in the stock and even on the NSE. The changes in other indexes and corresponding market sectors are also shown by the absolute breadth index. “stock market logic”, The absolute Breadth Index is a breadth indicator as it is calculated by the values based on advancing and declining values, whereas these values are the ones used to create it. Breadth indicator is one of the most commonly used indicators to generate accurate stock trading tips. Breadth indicator is a formula, which uses the absolute value of advancing and the declining issues to calculate the movements of the stock market.

  3. This decreasing price of the stocks and the volume of the stocks. The volume of the stocks implies the number of stocks bought and sold at the particular time. The technical analysts in order to find whether the market is bullish or bearish use breadth indicators. Generally, the standard exchange is New York Stock Exchange while Absolute Breadth Index is implemented. Nevertheless, it is not a fixed rule, ABI can be calculated using an exchange whether it is NSE or BSE or any other exchange. indicator evaluates the increasing and The simple formula used to calculate absolute breadth index is shown below: ABI = Absolute value of {(number of advancing issues) –(number of declining issues)} However, the Absolute Breadth Index is not considered as a standard volatility measurement tool. Still, the technical analysts frequently implement this technical indicator in order to generate the accurate trading tips as well as obtain unique trading opportunities to extract more profit.

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