Disparity Index Calculator
A price rarely sits exactly on its moving average, and the gap between the two is tradable information. The Disparity Index turns that gap into a single percentage: how far the current price has stretched above or below its n-period moving average, with a signal reading that tells you whether the stretch is mild, bullish, bearish, or extreme.
Enter the current price and the moving average value from your chart. The calculator returns the index, the raw price deviation, and a signal based on its built-in bands, so you can judge momentum and spot overbought or oversold stretches in seconds.
Signal
Signal bands used by this calculator: above +10% strong bullish, +5% to +10% bullish, -5% to +5% neutral, -10% to -5% bearish, below -10% strong bearish. Boundary values fall in the milder band: exactly +5.00% reads neutral and exactly +10.00% reads bullish.
The index is a momentum gauge, not a trading instruction. A stretched reading says price is far from its average; it never says when price will come back.
Quick Answer
Key takeaways
- The index is one division: (price minus moving average) divided by the moving average, times 100. The worked example, 112 against 100, gives +12.00%.
- Sign is direction, size is stretch. Positive means price is above its average, negative means below, and zero means price and average are exactly equal.
- The period buttons record which average you used; they do not change the math. Only the price and the average value enter the formula, and the page says so next to the buttons.
- The built-in bands (+5% and +10%) suit calm, large-cap style price action. Volatile small caps, crypto, and forex pairs routinely travel much further, so judge extremes against the asset's own history, not just the bands.
- Quick Answer
- What the Disparity Index actually measures
- The disparity index formula, step by step
- Worked example: price 112 against a 100 average
- Reading the five signal bands
- Four ways traders actually use the reading
- Choosing a period and an average type
- What competing calculators and guides miss
- Frequently Asked Questions
- Add This Calculator to Your Website
What the Disparity Index actually measures
It measures distance from trend, as a percentage. A moving average smooths recent prices into a single trend line, and the Disparity Index asks how far today's price has wandered from that line, scaled by the line itself so readings compare across cheap and expensive assets.
The indicator entered Western technical analysis through Steve Nison's Beyond Candlesticks, where he presented it as a Japanese technique for judging whether a market sits at a high-price or low-price area relative to its average. Nison's own examples run wide: a 13-week reading of -25% in one case, +12% on a 200-day average in another. That range is the honest context for any fixed band table. The bands in this calculator are a practical shorthand for typical equity moves, not a law of the indicator, and Nison paired extreme readings with candlestick reversal patterns rather than treating the number alone as a signal to act.
Because the result is a percentage, a +12% reading means the same stretch on a $20 stock and a $2,000 index future. What changes between assets is how often that stretch occurs, which is why experienced users keep a mental note of the normal range for the market they trade. Expressing a gap as a percentage of its base is a habit traders use elsewhere too, for example when they size the price gap between two markets with an arbitrage percentage calculator. It is also the same price-against-an-average thinking desks use when they grade trade fills against an average execution price.
The disparity index formula, step by step
One subtraction, one division, one multiplication. Nothing else enters the calculation.
Read both numbers off the same chart. Take the latest price (usually the close) and the moving average value for your chosen period at that same bar. Mixing a live price with yesterday's average value skews the reading.
Subtract to get the deviation. Price minus average is the raw gap in currency: 112 minus 100 = +12.00 in the worked example.
Divide by the average and multiply by 100. 12 divided by 100 is 0.12, times 100 is +12.00%. Dividing by the average (not the price) is what makes the index comparable across assets.
Read the signal, then check the asset's own range. The calculator bands the result for you. Before treating an extreme as overbought or oversold, ask how far this asset usually travels from its average.
One input choice matters more than any other: which average you feed in. The formula accepts a simple, exponential, or weighted average, and each gives a different value for the same price, because an exponential average hugs recent prices more closely and usually produces a smaller reading. Pick one type and stay with it, or your readings will not compare from day to day.
Worked example: price 112 against a 100 average
The calculator is pre-filled with this case. Every figure below is what it returns.
| Measure | Result | How it is reached |
|---|---|---|
| Current price | 112.00 | Input |
| 14-period moving average | 100.00 | Input |
| Deviation | +12.00 | 112 minus 100 |
| Disparity Index | +12.00% | (12 / 100) x 100 |
| Signal | Strong bullish | Above the +10% band |
The mirror case is worth running once: keep the average at 100 and drop the price to 92, and the calculator returns -8.00% with a bearish reading. At 85 it returns -15.00%, strong bearish. Same formula, same bands, opposite side of the average.
Reading the five signal bands
The bands split the scale into five zones. With the average held at 100, each zone has a plain price translation, which makes the table below a quick reference while you work.
The worked example, +12.00%, sits in the far-right zone: strong bullish. The scale is symmetric because the formula is symmetric; a stretch down counts exactly as much as a stretch up.
| Reading | Signal | Price when the average is 100 | Plain meaning |
|---|---|---|---|
| Above +10% | Strong bullish | Above 110 | Price stretched well above trend; momentum strong, reversal risk rising |
| +5% to +10% | Bullish | 105 to 110 | Price clearly above trend without an extreme stretch |
| -5% to +5% | Neutral | 95 to 105 | Price near trend; no stretch to trade against |
| -10% to -5% | Bearish | 90 to 95 | Price clearly below trend |
| Below -10% | Strong bearish | Below 90 | Price stretched well below trend; oversold territory for this scale |
Boundary values land in the milder band, and the calculator is exact about it: +5.00% reads neutral, +10.00% reads bullish, -5.00% reads neutral, and -10.00% reads bearish. If your reading sits on a boundary, treat it as the start of the next zone rather than a confirmed extreme. Treat the zones themselves as a starting grid, too. A utility stock may spend months inside the neutral band and rarely print +8%, while a volatile crypto pair can live beyond +10% for weeks. The bands tell you where you are on this scale; the asset's history tells you whether that position is unusual for it.
Four ways traders actually use the reading
Overbought and oversold warnings. The oldest use, and the one Nison documented: an extreme reading marks a high-price or low-price area where reversal patterns deserve extra weight. A hammer candle at -12% means more than the same candle at -1%, because the stretch confirms the market is already extended.
Zero-line crosses. A move from negative to positive means price has reclaimed its average, a basic trend-change signal; a cross down means the opposite. Single crosses in choppy markets whipsaw badly, which is why many traders require the reading to hold on the other side for more than one bar.
Divergence. If price prints a new high while the index prints a lower high than last time, each new price extreme is stretching less from trend: momentum is fading even as price rises. The reverse at lows, higher index low under a lower price low, is the bullish version. Divergence is, in effect, a visible breakdown in the correlation between price and its own average: the two stop moving together. Divergence warns; it does not time the turn by itself.
Trend strength. A reading that stays positive and keeps making higher highs describes a healthy uptrend. A reading pinned near zero for weeks describes a market with no trend worth chasing, however exciting individual candles look.
Choosing a period and an average type
Shorter periods react faster and whipsaw more; longer periods move slowly and flag only major stretches. The presets in the calculator cover the range most chart packages default to.
| Period | Character | Typical use |
|---|---|---|
| 10 | Fast, noisy | Short-term timing; more extreme readings, more false alarms |
| 14 | Balanced default | The common setting across guides and platforms; a sensible starting point |
| 20 | Smoother, slower | Swing and position work; extremes are rarer and usually more meaningful |
Average type changes the number as much as period does. A simple moving average weights every bar equally. An exponential average weights recent bars more, sits closer to price, and so returns a smaller index for the same move. Neither is wrong; they are different yardsticks. The mistake is switching between them mid-stream and comparing readings taken with different rulers.
What competing calculators and guides miss
Most of what ranks for this term is explanation without a tool, or a tool without the interpretation. Four gaps kept showing up.
Gap 1: guides with no calculator at all. The best-known references, the encyclopedia entries and indicator write-ups, give the formula and stop. You still do the division yourself and then judge the result with no band framework beside it. This page pairs the working tool with the bands and boundary rules in one place.
Gap 2: bare calculators with no bands. The few interactive tools that exist return a percentage and a one-line verdict. None of them shows the full five-zone scale, translates the zones into prices for your average, or tells you what happens exactly on a boundary. Here, +10.00% is bullish, not strong bullish, and the page says why that matters.
Gap 3: fixed bands presented as universal truth. Several guides quote one threshold set as if it fits every market. The source material disagrees: Nison's examples span -25% to +12%, and practitioner guides note that some indices seldom reach 5% while volatile stocks pass 20%. This page keeps the tool's bands visible and labels them as this calculator's scale, then tells you to calibrate against the asset's own range.
Gap 4: silent period buttons. Tools that offer period choices rarely admit the period does not enter the formula. Here the hint under the buttons says it plainly: the period records which average you used, and the index needs only the price and the average value. If a tool ever implies otherwise, it is dressing up a two-input division as something more complex than it is.
One honest limit applies to this page as much as to any competitor: the index is built from past prices, so it lags sudden news-driven moves, and in a strong trend price can stay stretched far longer than a mean-reversion trader expects. Use it as one gauge alongside price action, a trend-strength measure such as the average directional movement index calculator, and risk limits, never as a standalone instruction.
Disclaimer: this calculator is an educational tool for technical analysis. It is not financial advice, and indicator readings do not predict prices. Trading involves risk of loss; consider your own situation and, for consequential decisions, a licensed financial professional.
Frequently Asked Questions
A momentum indicator showing the percentage difference between the current price and a moving average. Positive means price is above the average; negative means below. A reading of +12.00%, from a price of 112 against an average of 100, means price has stretched 12% above its trend line.
14 is the common default. Shorter periods (10) react faster and produce more extreme readings; longer ones (20) are smoother and flag only bigger stretches. Match the period to your trading timeframe, and remember the period only records which average you used: the index itself is computed from the price and the average value alone.
Either. The formula works with simple, exponential, or weighted averages; just be consistent, because the reading depends on which average you feed it. An exponential average sits closer to recent prices, so the same move usually gives a smaller index reading than a simple average does.
The price equals the moving average exactly. Crosses through zero are watched as trend-change signals: moving from negative to positive means price has reclaimed its average, and moving from positive to negative means it has lost it.
No. In a strong trend, price can stay stretched for a long time. In this calculator a reading above +10% is labelled strong bullish, and exactly +10.00% still reads bullish. Extreme readings warn of overbought conditions; they do not guarantee an immediate reversal, and Nison's own examples include readings far beyond +10%.
When price makes a new extreme but the index does not follow, momentum is weakening. A higher price high with a lower index high is bearish divergence; a lower price low with a higher index low is bullish divergence. Both warn of a possible reversal rather than confirming one.
Yes. It applies to any instrument with a price series: stocks, crypto, forex, commodities. Volatile markets travel further from their averages, though, so readings beyond the +10% and -10% bands are common there and carry less surprise than the same reading on a calm, large-cap stock.
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References
- Steve Nison, Beyond Candlesticks: New Japanese Charting Techniques Revealed (Wiley Finance, 1994). The book that introduced the Disparity Index to Western traders, including its use as an overbought and oversold gauge and its pairing with candlestick reversal patterns. Open Library: Beyond Candlesticks by Steve Nison. Accessed October 2026.
- QuantShare, "Disparity Index". Reference entry confirming the indicator's origin in Nison's book, its reading as a percentage change between price and moving average, and the moving average types it accepts. QuantShare: Disparity Index. Accessed October 2026.
- AlgoTradingLib, "Disparity Index". Encyclopedia entry giving the formula, the positive and negative interpretation, and the divergence and entry/exit uses. AlgoTradingLib: Disparity Index. Accessed October 2026.
- SuperMoney, "Disparity Index: Definition, Applications, and Examples". Overview of the indicator's origin, calculation, and role in anticipating reversals. SuperMoney: Disparity Index. Accessed October 2026.
- StockManiacs, "How to Trade the Disparity Index Indicator?" Practitioner guide noting that a 14-period reading beyond 10 to 15 can mark an extreme, and that overbought and oversold levels must be chosen per asset because some indices seldom reach 5% while volatile stocks exceed 20%. StockManiacs: How to Trade the Disparity Index Indicator. Accessed October 2026.
- TradingView, "Disparity Index" indicator script by BiggWigg. Platform implementation defining the index as the percentage difference between the closing price and the chosen moving average, with trend, overbought/oversold, and divergence uses. TradingView: Disparity Index indicator. Accessed October 2026.