On-Balance Volume

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On-Balance Volume (OBV) attempts to identify price levels where position accumulation is taking place. Similar in purpose and interpretation to Accumulation/Distribution. Part of a group of trading indicators commonly referred to as "Oscillators" (other oscillators include Relative Strength Index, and Accumulation/Distribution), OBV provides confirmation and divergence information.[1] Most analysis of OBV states that the value of OBV isn't as important as the slope of the line resulting from plotting OBV over time.

Popularization of On-Balance Volume is credited to Joseph Granville in his 1963 book "Granville's New Key to Stock Market Profits", with preceding work by Woods and Vignolia in the late 1940's.

Calculating On-Balance Volume[edit]

If today's closing price > previous session close then:

OBV = previous session's OBV + today's volume

If today's closing price < previous session close then:

OBV = previous session's OBV - today's volume

If today's closing price is the same as yesterday then:

OBV = previous session's OBV

Resources[edit]

References[edit]

  1. On-Balance Volume. Financial-Edu.