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This is how they explain it in the
Metastock software (they call it PVT but I guess it's the same
thing):
The Price Volume Trend (PVT) is similar in
concept to On Balance Volume (see On Balance Volume) in that it is a cumulative
total of volume that is adjusted depending on changes in closing prices.
But whereas OBV adds all volume on days when prices close higher and subtracts
all volume on days when prices close lower, the PVT adds only a portion of the
daily volume. The amount of volume added to the PVT is a function of the
amount by which prices rose or fell relative to the previous day's
close.
PVT = (((C-ref(C,-1)) / ref(C,-1)) * V) +
IWhere: C = Today's closing priceref(C,-1) = Yesterday's
closing priceV = Today's volumeI = Yesterday's Price Volume
TrendThe PVT is calculated by multiplying the day's volume by the percentage
change of the underlying security and adding this value to a cumulative
total. For example, if the security closed up 0.5% and volume was 10,000
shares, we would add 50 (i.e., 0.005 * 10,000 = 50) to the PVT. If the
security had closed down 0.5%, we would have subtracted 50 from the
PVT.
See Plotting an Indicator for more information
on plotting indicators. See Price Volume Trend for more information on the
PVT parameters.
-----Oprindelig meddelelse-----Fra:
Norman <<A
href="mailto:nwinski@xxxxxxxxxxxxxxx";>nwinski@xxxxxxxxxxxxxxx>Til:
realtraders@xxxxxxxxxxxxxxx
<<A
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx>Dato:
5. marts 2001 21:05Emne: Re: [RT] Re: Bear
Trap
My problem with OBV is that I think it is
flawed because it treats all price movements the same.
Using OBV, a 1,000,000 volume is the same
whether the stock moves .01 or $10. Volume is energy in and price
change is energy out. The two example are widely different. For this
type of analysis, I prefer VPT = Volume
Price Trend = take daily price movement divide by previous day's close and
multiply that percentage movement times that day's volume and plot. There is a
good article on VPT in the 1970 Investor's
Intelligence Encycl. of Stock Market Techniques.
Enjoy,
Norman Winsk
<BLOCKQUOTE
style="BORDER-LEFT: #000000 solid 2px; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
Stan Book
To: <A
href="mailto:realtraders@xxxxxxxxxxxxxxx";
title=realtraders@xxxxxxxxxxxxxxx>realtraders@xxxxxxxxxxxxxxx
Sent: Monday, March 05, 2001 11:17
AM
Subject: RE: [RT] Re: Bear Trap
<SPAN
class=90374615-05032001>GB,
<SPAN
class=90374615-05032001>
The
theory is that volume leads price. your chart suggests lower prices ahead,
but does not negate an intervening rally.
<SPAN
class=90374615-05032001>
I
have a few problems with OBV. First, it seems to me that OBV works better
for individual issues than for indexes. Second, OBV may not be the best
measure of accumulation / distribution. Third, One never knows if a
divergence is just an aberration this time or, if valid, how long it will
take prices to to be pulled in the direction of volume.
<SPAN
class=90374615-05032001>
<SPAN
class=90374615-05032001>Attached is a proprietary volume based oscillator
that does a fair job of anticipating (or confirming) Dow turns. Even so, an
oscillator extreme can anticipate a significant price extreme by 2 to 5
weeks.
<SPAN
class=90374615-05032001>
<SPAN
class=90374615-05032001>
<FONT face="Times New Roman"
size=2>-----Original Message-----From: Gitanshu Buch
[mailto:onwingsofeagles@xxxxxxxxxxxxx]Sent: Monday, March 05,
2001 7:23 AMTo:
realtraders@xxxxxxxxxxxxxxxSubject: [RT] Re: Bear
Trap
Just started catching up on recent posts...
So I suppose this divergence in OBV v/s Price favors
Price?
Thanks.
GitanshuTo unsubscribe from
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