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The Ease of Movement Indicator or the Arms Index was developed by Richard Arms, Jr. The indicator shows the link between volume and price change, it determines the ease at which prices are moving. Its formula uses the current and previous high and low prices as well as the volume (in millions).
It is considered bullish when the indicator crosses above zero, and bearish when it crosses below zero. Above the zero level, the indicator indicates that the security is moving upward easily, while below the zero level it indicates that the security is moving downward easily. At the zero level, the security price movement is small on heavy volume.
The Ease of Movement Indicator is also called the Arms Index. It is different from the TRIN (Arms Index) which is a breadth indicator that uses the number of advancing and declining issues in its formula. Both formulas were developed by Richard Arms but their calculation is different.
Note that the TRIN raw data is choppy. This is because the indicator is not smoothed with moving averages. The smoothed Ease of Movement indicator or Arms index can be used to determine trends in how the money is flowing into or out of a security.
This item creates an indicator whose name is ArmsIndex. The function doesn't accept any parameters.
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