Being a cumulative total volume, the OBV indicator should be going up when the price is going up and be going down when the price is falling. If the price makes a new high, the OBV should also make a new high. Another type of bearish divergence occurs when the price remains relatively quiet and fails to make a higher high but the OBV soars higher than the previous high — indicating that the institutional traders are accumulating short positions.

Indicators and Strategies

In both situations, the chances are high that the price will turn downwards. Also, if the OBV makes a lower low when the price is relatively unchanged or makes a higher low, a non-classical bullish divergence occurs, indicating that the smart money institutional traders is accumulating long positions.

The volume RSI is a volume indicator that measures the speed and change of volume during the price up-close up-volume and during the price down-close down-volume. It is a momentum indicator that tries to gauge changes in price trend via changes in bullish when the price closed up and bearish when the price closed down volume data. In other words, the volume RSI is similar to the price-based RSI , except that changes in volume data are used instead of changes in price. However, the direction of the change up-volume or down-volume is determined by the direction of price close.

So this volume indicator compares the volume traded during trading sessions when price closed higher to the volume traded when price closed lower to know which is stronger. Volume RSI is calculated like the price-based RSI, the difference being that volume data is used instead of price data.

The calculation follows a four-step process:. Volume-price trend, also called price-volume trend PVT , is a volume indicator that relates the volume of security transacted with the fractional change in price. It helps to determine both the price direction and the strength of the price move.

Thus, the VPT shows the balance between the demand and supply of the asset and how it affects the price. Just like the on-balance volume, the start point in the indicator is taken arbitrarily, so the actual value of the indicator is not that important — the shape of the line graph is what matters.

Unlike the OBV which uses volume alone in accordance with the direction of price close, the VPT factors in the extent of the higher or lower price close. The interpretation of this volume indicator is similar to that of OBV. So if the main trend is up, the volume is expected to be high for a trading session that closes up, and in a downtrend, the volume should be high for sessions that close lower. Since the VPT is a cumulative direction-based value, it should be going up when a session is trading up in an uptrend and be going down when a session is trading down in a downtrend.

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If the price makes a higher high in an uptrend, the VPT should too; if not, a bearish divergence is created which might signal a price reversal. The volume oscillator is a volume indicator that displays the difference between two volume-based moving averages as a percentage of the slower moving average.

It consists of two moving averages of the volume data, one fast and the other slow. The difference between the two moving averages is expressed as a percentage of the slower moving average. In essence, the indicator is similar to the OsMA oscillatory moving average indicator , except that volume data is used instead of price. Sometimes, chartists add a moving average of the difference to serve as a signal line, thereby making the indicator look more like a volume-based MACD, and calls the indicator percentage volume oscillator PVO.

The VO is usually displayed as a single line that oscillates around the zero line, but it can also be displayed as bars above and below the zero line. When the indicator is at the zero level, it means that the faster moving average is crossing the slower moving average, as the difference between the moving averages will be zero. When the indicator is rising above the zero line, the faster moving average is rising above the slower moving average — indicating a short-term surge in volume.

Falling below the zero line means that the faster moving average is falling below the slower one, showing a decline in volume.

It is expected that strong price moves, up or down, should be accompanied by an increase in volume. So the indicator helps to confirm the force behind price movements. An increase in price in an uptrend or a decrease in price in a downtrend accompanied by a rise in the volume oscillator is a sign of strength in the trend direction. The money flow index is a volume indicator that oscillates between 0 and It is used to indicate the direction of money flow by estimating the values of recent transactions and the net direction of the transactions. It uses both price and volume data to identify overbought and oversold regions.

This volume indicator was created by Gene Quong and Avrum Soudack. Using the same logic as the relative strength index RSI , the MFI is often referred to as the volume-weighted RSI by some analysts because it uses both price and volume data in the calculation. This is the average of the high, low, and close prices of the trading session. The formula is as follows:. Generally, a value of 80 and above is considered overbought while 20 and below is considered oversold, but the creators of the indicator recommended 90 and 10 for overbought and oversold levels respectively.

In addition to the overbought and oversold regions, a divergence between the price and the indicator is important. For example, if the price is making a higher high but the indicator is making a lower high, the move is weak, and the price may reverse. The Chaikin money flow indicator CMF is a volume indicator that measures the money flow volume over a chosen period, usually 20 or 21 periods. Created by Marc Chaikin, the indicator uses the money flow volume — which also forms the basis for the accumulation distribution index covered soon — but instead of a cumulative total, the CMF gets the sum of the money flow volume.

Both buying and selling pressures are accompanied by an increase in volume, but the location of the closing prices are in accordance with the direction of price. So the indicator oscillates about the zero line — above zero indicating a bullish trend and below, a bearish trend. When the indicator rises above the zero line into the positive territory, there is a rising buying pressure and waning selling pressure. Conversely, when it descends below the zero line, there is a rising selling pressure and a declining bullish pressure.

The indicator can also show bearish and bullish divergences. It uses volume and price data to determine whether a stock is currently being accumulated or distributed.

Volume Indicators: How to Use Volume in Trading (List)

Because it uses volume to gauge price momentum, it is a leading indicator. The indicator shows how the price closes and the force behind the move. Because it is gotten from the product of the close location and the volume, the indicator rises faster if price closes near the high with a large volume — indicating a strong buying pressure. The indicator helps in assessing price trends and potential price reversals. When the price is in an uptrend, the indicator should also be in an uptrend.

If the indicator is in a downtrend, it may indicate a selling pressure distribution , and the price is likely to reverse to the downside. Developed by Richard Arms, the Ease of Movement indicator also known as the Ease of Movement Value EMV is a volume indicator that tries to use both momentum and volume data to ascertain how easily the price can move in a particular direction. It oscillates above and below the zero line, corresponding to bullish and bearish movements respectively.

In theory, if the price is able to move up easily, there is little selling pressure; thus, it will continue to rise. The EOM is usually seen as a volume-weighted momentum indicator because of the way it is calculated. The EOM formula has three components, namely: distance moved, volume, and the high-low range. The calculation is normally done in four steps:. What is volume in Forex and how do I measure it? What are the volume indicators for MT4?

Why Volume Zone Oscillator is the best Forex volume indicator.

Price and Volume Trend (PVT) Forex Indicator

Hello, dear traders! Stockbrokers know the importance of volume analysis. Volume, open interest, and price are key components in trading decisions. But unlike stock and futures trading, Forex volume is rarely used in trading. And there is a good reason for this. The currency market is a decentralized market where trading operations are carried out outside the exchange. This means that there is no formula for volume or method for tracking the number and size of contracts as in the stock market. However, there are volume indicators for MT4 that help the trader determine the approximate volume on Forex.

In this article, you will learn how volume is measured in Forex, whether you can use volume analysis in the Forex market as in the stock market, and how to use the Volume Oscillator and Volume Zone Oscillator indicators to increase your profit.

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See also our rating of Forex brokers. Here you can find only reliable and proven brokerage companies with real reviews of traders. Volume is like the air we breathe. Without volume, it is impossible to make the right trading decision. Volume is what makes prices move forward and creates trends.

If you are a day trader, trend trader, or swing trader, you need volume to see the price move. Without volume, we can't make a profit.