Price & Volume Trend

The Price & Volume Trend (or PVT) is similar to the On Balance Volume in that it accumulates volume weighted by the closing price variation. However, whereas "On Balance Volume" adds the entire day's volume when the close is up and subtracts the entire volume when the close is down, the Price & Volume Trend only adds or subtracts a fraction of the day's volume.

Calculation Method

PVT = PVTP + V * (C - CP) / CP

where:

• PVT_P: yesterday's PVT
• V: today's volume
• C: today's closing price
• C_P: yesterday's closing price

Example

Interpretation

The interpretation of this indicator is similar to that of the On Balance Volume. However, many investors believe that the PVT more precisely illustrates the inflow and outflow of money from a stock. This is because the On Balance Volume adds the entire day's volume regardless of the closing price variation magnitude, whether it be small or large.

In contrast, the Price & Volume Trend only adds a small fraction of the volume if the price variation is low and a significant fraction of the volume if the price variation is high.