On Balance Volume
On Balance Volume ("OBV") is a momentum indicator that relates volume to price change.
Study Type: Stand-alone
Description
On Balance Volume is a running total of volume. It shows if volume is flowing into or out of a security. When the security closes higher than the previous close, all of the day's volume is considered up-volume. When the security closes lower than the previous close, all of the day's volume is considered down-volume.
Formula
On Balance Volume is calculated by adding the day's volume to a cumulative total when the security's price closes up, and subtracting the day's volume when the security's price closes down.I
- f today's close is greater than yesterday's close then: OBV = Yesterday's OBV + Today's Volume
- If today's close is less than yesterday's close then: OBV = Yesterday's OBV - Today's Volume
- If today's close is equal to yesterday's close then: OBV = Yesterday's OBV
Parameters
None