Conviction Ratio | viResearch

Conviction Ratio | viResearch

Conceptual Foundation and Innovation
The Conviction Ratio by viResearch is a trend strength indicator designed to measure the conviction behind market movements by analyzing price returns over a defined period. It reflects how consistently and powerfully an asset has trended within that time window. The higher the ratio, the stronger and more confident the trend.

This approach provides a clear and intuitive way to gauge whether recent price action is supported by genuine momentum or merely short-term noise. By quantifying return intensity, the indicator helps traders identify assets that are trending with conviction versus those moving without sustained direction.

Technical Composition and Calculation
The Conviction Ratio evaluates an asset’s performance by comparing its current price level to past values over a customizable lookback period. It measures how much the market has advanced or declined, translating that movement into a normalized ratio that reflects overall trend conviction.

A rising ratio indicates strong and accelerating trend strength, while a falling or negative ratio suggests fading momentum or potential reversal. This dynamic view helps traders visually assess whether a trend is strengthening, weakening, or entering a transition phase.

Features and User Inputs
To accommodate different trading styles and timeframes, the indicator offers several adjustable settings:

Period (Days): Defines how far back the indicator measures return performance, allowing users to analyze short-term bursts or longer-term trends.

Start Date: Sets the beginning of the analysis window, useful for backtesting or focusing on a specific time period.

The Conviction Ratio line changes color dynamically to reflect market conviction:

Aqua: Positive ratio, indicating strong upward trend strength.

Pink: Negative ratio, signaling weak or declining market conviction.

Practical Applications
The Conviction Ratio can be applied across all asset classes — equities, cryptocurrencies, forex, and commodities — to identify where the strongest trends are forming. It’s particularly useful for:

Measuring Trend Strength: Quickly determine how strong or sustained a trend is within the chosen timeframe.

Identifying Momentum Shifts: Spot when market conviction is increasing or fading, signaling potential trend continuation or reversal.

Comparative Analysis: Compare multiple assets to find which ones are trending with greater conviction and consistency.

Advantages and Strategic Value
The Conviction Ratio offers a simple yet powerful way to quantify trend quality. Instead of relying on price direction alone, it evaluates the strength and persistence behind that movement. This makes it an ideal tool for trend followers, momentum traders, and portfolio managers seeking to align with assets showing genuine directional confidence.

Its normalized structure ensures consistency across different volatility environments, making it suitable for both discretionary and systematic trading strategies.

Visual Cues and Interpretation
The indicator plots a smooth, color-coded ratio line centered around zero, with key reference levels at +1.0 and –1.0.

Ratios above +1.0 indicate strong, confident uptrends.

Ratios below +1.0 suggest weakening or unstable market conditions.

Ratios below 0 represent unprofitable or negative-return periods.

Sharp declines in the ratio, even from high positive levels, can serve as early warning signals of weakening momentum or potential trend reversal.

By tracking both the level and the rate of change of the ratio, traders can detect when market conviction starts to fade — often before price itself shows clear reversal signs.

Summary and Usage Tips
The Conviction Ratio | viResearch provides traders with a clean, data-driven way to interpret market strength. By focusing on return-based trend conviction, it highlights where the market is moving with genuine confidence and warns when conviction begins to erode.

Use it to confirm breakout strength, identify fading rallies, or monitor early signs of trend exhaustion. The higher the ratio, the stronger the conviction — but when it starts falling sharply, take note. It might be your first signal that the trend is losing strength.

Note: Historical results are for reference only and do not guarantee future performance.