Why market breadth indicator is the holy grail for traders?

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Market breadth is the only reliable indicator in the market which tells us the underlying sentiment of the current market. We should always first analyze the underlying sentiment of the market before putting our hard earned money on the line.

Now the question might arise in your mind how do we check the market breadth of the market?

Wait!

I’m not going to tell you that “Go to NSEINDIA.COM website and check how many stocks advanced versus how many stocks declined today”. This isn’t the proper way to check market breadth of the market.

Trading is not so easy; you have to do some work to get the information. First of all, you have got to download ‘NSE BHAVCOPY’ from their official site, then after downloading the sheet, open it now on your excel in computer. Then delete every column on the sheet except “SYMBOL, CLOSE & PREVIOUS CLOSE column. Then write the formula on next column to get the percentage change of today.

The excel formula for % change in stocks is:   

=(B2-C2)/C2

Equal, opening bracket, close price ,minus, previous close price, closing bracket, forward slash and previous closing price.

Then filter the stock with the help of sort & filter option in excel sheet. And see how many stocks are up by 5% today versus how many are down by 5% today. And manually calculate which party is dominating the market by 1 to 3 ratios.

Analyzing this simple formula costs thousands of rupees to traders every year. Use this, if it makes sense to you.

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