what does ulcer index mean 
the ulcer index ui is a technical indicator that measures downside risk in terms of both the depth and duration of price declines the index increases in value as the price moves farther away from a recent high and falls as the price rises to new highs the indicator is usually calculated over a 14 day period with the ulcer index showing the percentage drawdown a trader can expect from the high over that period the greater the value of the ulcer index the longer it takes for a stock to get back to the former high simply stated it is designed as one measure of volatility only on the downside understanding ulcer index ui the ulcer index was developed by peter marin and byron mccann in 1987 for analyzing mutual funds marin and mccann first published it in their 1989 book the investor s guide to fidelity funds the indicator looks only at downside risk not overall volatility other volatility measures like standard deviation treat up and down movement equally but a trader typically does not mind upward movement it is the downside that causes stress and stomach ulcers as the index s name suggests calculating the ulcer indexthe indicator is calculated in three steps 