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How to create a ratio indicator using QS Trading Software

Updated on 2010-11-16





If you want to create ratio indicators then all you need is the composite tool and four or five minutes of your time. Advance Decline Ratio, Volume Ratio of Advancing to Declining stocks, AAII Bull Ratio Sentiment Index, Gold to Silver Ratio are examples of popular ratio indicators that were built by dividing one time-series or indicator by another one. The Volume Ratio of Advancing to Declining stocks for example results from the division of the total volume of advancing stocks by the overall volume of declining stocks.

This post will show you the easiest and fastest way to create ratio indicators using QuantShare trading software and its composite tool. For this example we are going to create the Advance Decline Ratio, but first you need to download historical EOD data of the number of advancing and declining stocks. Here is the trading item link: Advance-Decline-Unchanged issues for NYSE, AMEX and NASDAQ.


How to Create a Ratio Indicator

To create a new composite, select Tools then Composites. In the composite form, click on the "Add" button. In the symbols list, you must enter only one symbol. The other symbol will be referenced using the "Ticker" function of the QuantShare language.

Add a "Symbols Info" new condition then click on the cell under the "Values" column and type "^ADVANCE-ISSUES-AMEX" in the cell under it. Click on "Next" to move to the composite formula screen.

We must now calculate the total number of advancing stocks and declining stocks from the three major US exchanges (NYSE, NASDAQ and AMEX). In order to do this, we must reference each symbol data using the "Ticker" function and then sums the number of advancing / declining issues for each stock market. After that we divide the total number of advancing stocks (from all U.S. exchanges) by the total number of declining stocks and assign the result to the "composite" variable.

In the calculation method select "the sum of the values added to the composite". Note that this isn't really very important because the "composite" variable will be calculated only once (remember that we have only one symbol in our symbols list).

To complete the process, click on "Next" twice, type the ratio indicator name, then click again on "Next". A symbol with the composite name will be created just after the composite calculation is completed (The symbol is preceded by "_". This makes composites easily recognizable)











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