what is the upside downside ratio 
the upside downside ratio is a market breadth indicator that shows the relationship between the volumes of advancing and declining issues on an exchange investors typically use this indicator to determine the momentum of the market at any given time the upside downside ratio is a variation on the advance decline ratio adr which compares the number and not the trading volume of stocks that closed higher against the number of stocks that closed lower than their previous day s closing prices the formula for the upside downside ratiothe upside downside ratio is calculated as follows u p s i d e d o w n s i d e r a t i o a d v a n c i n g i s s u e s d e c l i n i n g i s s u e s where a d v a n c i n g i s s u e s total volume traded of securities that close above their opening price d e c l i n i n g i s s u e s total volume traded of securities that close below their opening price begin aligned upside downside ratio dfrac advancing issues declining issues textbf where advancing issues text small total volume traded of securities that text small close above their opening price declining issues text small total volume traded of securities that text small close below their opening price end aligned upside downside ratio declining issuesadvancing issues where advancing issues total volume traded of securities thatclose above their opening pricedeclining issues total volume traded of securities thatclose below their opening price understanding the upside downside ratiofor technical analysis strategies recognizing directional change is essential to success the upside downside ratio is an effective way to help traders quickly get a feel for potential trends or the reversal of existing trends the upside downside ratio is often smoothed using a simple moving average to filter out smaller less significant movements the indicator generates values greater than 1 when the volume on advancing issues is greater than declining issues it generates values less than 1 when the volume on the declining issues is greater than advancing issues the upside downside ratio also known as the up down volume ratio is available as a technical indicator on many trading platforms trading with the upside downside ratiothe upside downside ratio is often used to gauge overbought and oversold conditions in the market low values can indicate that the market is reaching oversold levels while high values can indicate that the market is becoming overbought as an example if the indicator has a value of less than 1 traders could look for buy entry points in securities that are approaching significant support levels such as stocks nearing their long term trendlines momentum traders who trade in the direction of the prevailing trend often use the upside downside ratio to confirm the broader market has support from institutional investors traders may decide to use the indicator as a trade entry filter for instance they may only buy a stock when the indicator is above 1 5 or take a short position when it is below 0 5 traders should use other technical indicators in conjunction with the upside downside ratio when building a trading strategy special considerationsother technical indicators such as the relative strength index rsi and stochastic oscillator could be used with the upside downside ratio to ensure the market is not in an extreme overbought or oversold condition and due for a price correction for example if the indicator has a value less than 0 5 and the rsi is below 30 it may be prudent to avoid entering a short position until a short term retracement occurs 