On-Balance Volume (OBV)
OBV (On Balance Volume) is an algorithm that mathematically measures the relationship between volume and price.
It was developed by Joseph Granville in 1960. OBV relates price change and trading volume. When the closing price of the market is above the previous closing price, the trading volume is included in the transaction positively, while when the closing price of the market is below the previous closing price, the volume is included in the transaction negatively.
- If today's closing price is greater than the previous day's closing price; OBV = OBV of the previous day + Today's trading volume
- If today's closing price is less than the previous day's closing price; OBV = OBV value of the previous day – Trading volume today
- If today's closing price is equal to the previous day's closing price; OBV = OBV value of the previous day
OBV mostly moves in sync with price movements. As OBV increases, it is expected that the price will increase, and when it decreases, it is expected that the price will decrease, that is, the volume will move in the direction of supporting the price.
Last modified 4mo ago