Table of Contents

Calculating On-Balance Volume

By

澳洲幸运5开奖号码历史查询:Sean Ross

Updated January 21, 2025

Reviewed by

Thomas J. Catalano

Fact checked by

Vikki Velasquez

The on-balance volume (OBV) creates a running total of positive and negative trading volume for a security. One of the original momentum oscillators, OBV spawns from Joe Granville's theory that volume precedes price in an instructive, measurable fashion.

Key Takeaways

The on-balance volume (OBV) displays the total positive and negative trading volume for a stock or security.
To measure OBV, investors evaluate the closing prices between two trading days.
OBV is commonly used to track the activity of large, institutional investors.

On-Balance Volume (OBV) Formula

The formula's calculation rises whenever the volume on up days is greater than on down days and vice versa. To measure a security's OBV, traders must understand the relationship between the 澳洲幸运5开奖号码历史查询:closing prices of two successful trading days. When the second day's𝄹 priceꦫ closes above the prior day's close:

$\begin{aligned} &\text{OBV} = \text{Previous OBV} + \text{Current trading volume} \\ \end{aligned}$

If prices close lower on the second day:

$\begin{aligned} &\text{OBV} = \text{Previous OBV} - \text{Current trading volume} \\ \end{aligned}$

Important

If a stock closes higher than the previous close, the day’s vol🃏ume is considered up-volume. If a stock closes lower than the last close, the day’s volume is considered down-volume.

Using OBV

Traders and analysts look to the nature of OBV movements over time; the slope of the OBV line carries all of the weight of analysis. Analysts use the volume numbers on the OBV to track large, institutional investors. They ಌtreat divergences between volume and price as a synonym of the reಞlationship between "smart money" and the masses, hoping to showcase opportunities for buying against incorrect prevailing trends.

How Does Time Affect OBV?

Despite being plotted on a 澳洲幸运5开奖号码历史查询:price chart and measured numerically, the individual quantitative value of OBV is irrelevant. The indicator is cumulative, while the time interval remains fixed by a dedicated staꦍrting point, meaning the real number value of OBV arbitrarily depends on the start date.

What Is a Momentum Oscillator?

OBV is a 澳洲幸运5开奖号码历史查询:momentum oscillator that measures a stock’s price changes over time.

How Is OBV Affected by Large Investors?

OBV can be affected numerically when institutional money drives up the price of an asset. These large inve♈stors may then sell afte♈r other investors jump in.

The Bottom Line

On Balance Volume (OBV) calculates buying and selling as a cumulative indicator that adds volume on𒆙 up d🐻ays and subtracts volume on down days. To calculate OBV, investors evaluate the closing prices between two trading days.

Investopedia does not provide tax, investment, or financial services and advice. The information is presented without consideration of the investment objectives, risk tolerance, or financial circumstances of an investor and might not be suitable for all investors. Investing involves risk, including the possible loss of principal.

Article Sources

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Joseph E. Granville. "." Papamoa Press, 2018.

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