Market breadth study

#1
Hi All,
I am a newbie in trading and trying to develop a trading system, which I will backtest. I want to first study the market breadth before investing in any stock. I have studied few TA indicator related to market breadth.
I am stuck in developing the strategy to study the market breadth. Your inputs will be appreciated.

My queries are ..
  1. Shall I study BSE indices like BSE 100/200 or 500 to measure the breadth?
  2. Would it be better to measure sectoral market breadth like BSE AUTO/METAL before investing in any sector?
  3. Or should I study industry movement before investing in any industry stock?
My understanding is if I would do sectoral market breadth study it would give me signal specific to sector and hence I would be able to trade in sector which are in trend.

I was recently studying a BSE sectoral index and found that it includes more than one industry like BSE HealthCare has hospital and pharmaceutical industries; BSE METAL has iron and aluminum industry. Hence even if one industry is in trend, it would appear that whole sector is in trend.

Please advice.
 

mohan.sic

Well-Known Member
#2
Hi All,
I am a newbie in trading and trying to develop a trading system, which I will backtest. I want to first study the market breadth before investing in any stock. I have studied few TA indicator related to market breadth.
I am stuck in developing the strategy to study the market breadth. Your inputs will be appreciated.

My queries are ..
  1. Shall I study BSE indices like BSE 100/200 or 500 to measure the breadth?
  2. Would it be better to measure sectoral market breadth like BSE AUTO/METAL before investing in any sector?
  3. Or should I study industry movement before investing in any industry stock?
My understanding is if I would do sectoral market breadth study it would give me signal specific to sector and hence I would be able to trade in sector which are in trend.

I was recently studying a BSE sectoral index and found that it includes more than one industry like BSE HealthCare has hospital and pharmaceutical industries; BSE METAL has iron and aluminum industry. Hence even if one industry is in trend, it would appear that whole sector is in trend.

Please advice.
here, what do u mean by market breadth.
 
#3
market breadth is used to gauge the direction of market by comparing number of companies advancing to number of companies declining.

There are various TA indicator for this like force index, up/down volume spread, Arm index, Chaikin ocillator etc.
 

mohan.sic

Well-Known Member
#4
market breadth is used to gauge the direction of market by comparing number of companies advancing to number of companies declining.

There are various TA indicator for this like force index, up/down volume spread, Arm index, Chaikin ocillator etc.
what is need of any indicator to know no of advances: no of declines.
 
#5
indicator is not used to know no. of advance or decline, it is rather created from no. of advance and decline to find market/sector/industry direction.
 

Broker Special Offers

Intraday Higher Leverage

Save up to 90% in brokerage and get higher leverage for intraday trades.

Name:Phone:
Email:City:
State:
Are you a day trader?