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Finance Glossary

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Advance/ Decline Ratio


It's an index. Just an index... but one that is widely quoted in the financial press.

Specifically, an advance/decline ratio is the number of stocks which are up vs. the number which are down (hence the catchy "advance" and "decline" talk). Money guys and financial reporters use this ratio when trying to decide whether the market is about to change. When the ratio is high, there's a lot of buying (maybe even too much) and when it's low, that could be a sign of overbuying.

You can imagine, though, how this index has wide ranges for error; i.e., every stock could be down one penny and the ratio would be 0—which would be like "as bad as it's ever been"— when in fact the day was basically flat as the opposing team on Glee.