Ulcer Index

What is Ulcer Index?

The Ulcer Index measures downside risk by tracking the depth and duration of drawdowns from recent highs. Named for the stress it measures - higher values are more "ulcer-inducing" for investors.

Parameters

• 14 periods: Lookback window
• Drawdowns: From rolling high

Interpretation

• High (>10): Severe drawdown, high stress
• Medium (5-10): Moderate drawdown
• Low (<5): Minimal drawdown, calm

Zone Annotations

• High (>10): Severe drawdown, high stress
• Medium (5-10): Moderate drawdown
• Low (<5): Minimal drawdown, calm

Trading Signals

• Rising UI = deepening drawdown
• Falling UI = recovery underway
• Use for risk-adjusted returns (UPI)

Price Overlay

• Enter Closer-Look mode to see close price overlay
• Toggle: Show/hide close price line (right axis)
• UI peak + price drawdown = maximum pain
• Falling UI + rising price = recovery