Advance Decline Percent

Advance Decline Percent, is a breadth indicator that takes the net difference between the Advances and Declines and expressed as a percentage against the total number of constituents of an index for which the advance decline percent is calculated.

What are Advances and Declines?

Advances are nothing but the number of stocks which are closed higher by any degree than yesterday’s close, Declines are nothing but the number of stocks which are closed lower than yesterday’s close by any degree.

For example, Let’s take Nifty50, for any given day if we want to find out the Advance Decline Percent then we must do the following steps.

  1. Find the Number of Advances
  2. Find the Number of Declines
  3. Find the Net Difference between Advances and Declines
  4. Express the Net Difference as a Percentage against the Total Constituents of an Index

 

On a given day in Nifty50 there was 30 Advances and 10 Declines and 10 No Change, so the net difference between Advance and Decline for that given day is 20, so, take that 20 (net difference) and divide it by the total number of constituents of Nifty50 which is 50, so 20/50 is 40%, so for that given day the Advance Decline Percent is 40% for Nifty50, incase if there was more number of Declines than Advance then the net difference would have been negative and in turn the Advance Decline Percent would also became negative.

Let’s look at an example of Advance Decline Percent for Nifty50.

The above picture is a daily candlestick chart of Nifty50 from 1st Jan 2022 to 13th Jun 2023, below which is the Advance Decline Percent Breadth in green line, there is a red dotted horizontal line separating the positive and negative percent values.

This Advance Decline Percent Breadth indicator doesn’t have a look back period, meaning it doesn’t deal with averages of any period of Advance or Decline, this indicator shows the net percentage value for the respective days.

Whenever the Advance Decline ratio is above green it means, the index has got the strength for the trend form its underlying constituents.

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