Using OBV...

[John Nelson <trader@xxxx>]

I have attached my first (lame) attempt at applying OBV in a system. 
It's a simple MA + crossover strategy. I'm not really pleased with it 
because it tends to just following the direction on the way up and down 
and generates FAR too many trades for my tastes. I would like to see 
clustering of trades at clear volume inflections and way fewer signals.

How does one use OBV in general?

-- John

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_____________________________________________________

John T. Nelson
Trader | Dreams Of Empire
mail: | trader@xxxx
web: | http://www.dreamsofempire.com/
_____________________________________________________
"Prediction is sexy... but strategy makes money"


// Test the OBV indicator as a system...

MaxGraph = 4;

Graph0Style = 1;
Graph1Style = 1;
Graph2Style = 1;
Graph3Style = 1;

Graph0Color = 1;
Graph1Color = 1;
Graph2Color = 1;
Graph3Color = 5;

// Construct the signal line...

PER1 = 5;
PER1 = Optimize("OBV1 Periods",PER1,1,40,1);
PER2 = 2;
PER2 = Optimize("OBV2 Periods",PER2,1,40,1);

MA1 = MA(OBV(), PER1);
MA2 = MA(OBV(), PER2);

OBVUp = Cross( MA1, OBV());
OBVDwn = Cross( OBV(), MA2);

// Signals...

Buy = OBVUp;
Sell = OBVDwn;

Short = Sell;
Cover = Buy;

Graph0 = OBV();
Graph1 = MA1;
Graph2 = MA2;

Title =Name() + " -OBV Test: " +" Red Line " + WriteVal ( Graph0 );