Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Glossary

ON-BALANCE VOLUME

On-Balance volume is a volume-dependent tool meant to reveal the connection of deals and asset’s price movements. This is used to confirm a trend and reversals.  When charts show a rising OBV together with decreasing prices, it denotes unstable downtrend ready to turn into a bullish reversal. When OBV falls together with rising prices, the uptrend is weakening and there is a possibility of bearish reversal.   

 Once the line rises, a price uptrend is verified. When the line falls, a price downtrend is confirmed.  

FORMULA

OBV(t) = OBV(t-1) + Vol, if C(t) > C(t-1);

OBV(t) = OBV(t-1) – Vol, if C(t) < C(t-1);

OBV(t) = OBV(t-1), if C(t) = C(t-1),

  where: t – current period; t-1 – previous period; C – close price; Vol – volume.
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