On-Balance Volume

["Dick Crotinger" <dangle@xxxxxxx>]

Since I am mostly an equity and equity options trader, I don't fully
understand how OBV works in the futures arena.

Over on the stocks side, at least by my understanding, it is a matter of
traded volume up versus traded volume down.  Add the number of shares traded
on upticks, deduct the number of shares traded on downticks, and you come up
with a number which is "on-balance" what the market thinks about this stock.
If the number is increasing, people are buying, and conversely.  I guess
there are also variations, based on daily stats, or hourly, or just come up
with a time-frame, versus a per-trade refinement, but it's all the same
basic concept.

Futures don't report number of shares in their volume statistics, merely
number of trades.  I can't tell, and to my knowledge, no-one else can
either, how many contracts changed hands in each reported trade... merely
that the trade happened at a certain time, at a certain price.

Is OBV of use in futures mostly because most trades are "single contract"
(which I doubt), or is there a better reason?  Could stock traders extract
more meaningful results if we went with "number of trades" versus "number of
shares" (assuming it were available, which I also doubt)?

Thanks for any insights...

Dick Crotinger