In any stock exchange there will be a list of top volume and value movers, which are the stocks that make the business running for the exchange. Likewise our exchange too lists the same. But, are the stocks that come into this top ten list winners every day? It is not so, and many a times only one or two reap rich rewards. Those are the stocks that are strongest or the weakest.
How to know which of them is the strong or weak? This thought got the idea of the ‘Active’s Index’. An Index comprising of 10 stocks, from the combined list of both the top ten volume and value movers. More than 80% of the component list is the stocks that come into these lists everyday, while 20% is oscillating. The stock that makes it to the list most of the time in a week is considered to be a component in this index and it is re-evaluated every Friday after market closes.
The index is calculated in the Equal weight methodology, giving 10% weight to each stock that gets representation into the index. By this way of calculation, a single stock with very high market capitalization cannot dominate the index and we get fair opportunities on which we can be confident.
By comparing the index with the stock that is listed in it, we can easily get to know which among the toppers in the exchange have strength on the bullish side or has stronger weakness in the bearish side.
When a stock goes against the index and if at the same time the index shows signs of the current trend getting weaker. We get the best stock at the right time before it erupts into a fancy run and vice versa for shorts.
We are calculating this index in the 5 minutes time frame but not in real time. It is worked after market hours. This work began as a small thought to have an edge to find some exclusive trading opportunities in the market. Efforts are being made to give this index in the site on an hourly basis with facility to compare the component stocks and take decisions to trade.
