Ulcer Index Indicator – Get To Know More About It
Ulcer index indicator measure the stress of holding trade and investment by simply measuring the price retracements. Ulcer Index is based in the notion which downward volatility is bad, however upward volatility is good. Unlike the standard deviation, the economic industry benchmark way of measuring risks of the stock that equally weights both increase to upside volatility and the violent decrease to downside volatility. Ulcer Index take more enlightened approach which state that investors care only with regards to downside risks of stock, not on the upside risks, the upside risk are good, it’s equivalent to profit, if you’re in the long stock.
It is a risk measurement of stock market or it is the indicator for technical analysis. This is also the amount retracement and drawdown that occurs over the period. Standard deviation equally takes care of down and up movement. Traders and investors are giving much attention to the downside that it is the source of stomach ulcers and stress that suggests name index.
The drawdown of measuring the ulcer index indicator is the Intel stock that had sustained and strong higher movement. These are simple ulcer index indicator that might be able to help you understand more of the standard business procedure.
• Lower safe level (<5) – this is kind of price retracement that is moderate to the lower. This will cause you to feel stress, few ulcers and night sleeping difficulty.
• Above or Higher safe level (>5) – these are numerous downward retracement that investment can cause the traders and investor stress, ulcers and night difficulty sleeping.
The ulcer index will fall if the Intel price is making new and fresh highs to the drawdown period. The drawdown 14 day period has seen the effect of the ulcer index to increase. The investment of Ulcer Index believes that it is a risk downside and important to the investor. Consequently, mutual funds, commodities and stock comparison that are using ulcer index proven to be valuable and important. The comparison of investments that uses the ulcer index is sure to be convenient and easy to use in terms of monitoring the flow of business.
AMD has the higher ulcer index rather than the INTC so consequently it is the price information. The ulcer index focuses its real strength only on the downside risk. Stocks that are gapping up to 10% can affect the calculation of standard deviation similar with the stocks that break down to 10%. Though, if the majority of the investors are long stock, then it is viewed with joy while the gap down viewed with horror. Ulcer index indicator is a major measure of risk downside rather than simple variance calculation and standard deviation.
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