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Friday, 04/25/2014 3:30:39 AM

Friday, April 25, 2014 3:30:39 AM

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The Ulcer Index measures risk by focusing on drawdowns represented by price declines. This means it is best suited for long only investors or traders. The index hovers near zero when prices regularly record higher highs and advance. The index rises when prices move lower and extend from their recent high. Keep in mind that the Ulcer Index is not an indicator per se. It is just a measure of downside risk that can be used to compute risk-adjusted returns.

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