- PPF Points
- 2,966
Volume indicators are typically taken as the way a good one acknowledges the way they trade and the most preferred asset that individuals are working on, and also their final goals. On-Balance Volume (OBV) is one of the popular volume indicators among traders. OBV is a dynamic gauge of buying and selling pressure and operates based on a cumulative sum of volume. The OBV concept is simple: if a security finishes higher or lower than its previous close, the volume for this day is defined as bullish or bearish correspondingly. Traders use OBV to either agree with or contradict the price movements as an indication of a possible trend reversal. Another indispensable instrument is the Accumulation/Distribution Line (A/D Line), which is the power of money and volume to clarify whether a security is being accumulated (bought) or distributed (sold). The measure of volume and its relation to price give a strong point of view such as with protesting an acquisition or an abandonment of a commission. The more prices escalate in line with higher volume, the more it is an indication of strong buying pressure, while constant or fluctuating price trends of volume represent no serious buyers of the commodity and the stock price may fall. Moreover, if Volume Weighted Average Price (VWAP) is not calculated, it can be a handicap for day traders. Based on volume, VWAP is a tool that tells investors which price level is the average price of a stock for the specific trading day and can compare price behavior over time. Every signal provided by these indicators with their different focuses on the market is excellent and serves as support when combined, they seem to be the language in which one can have a comprehensive global market perspective, within his/her grasp, and of course, closely related to the price movement.