Wednesday, March 19, 2014

Price Volume trend

Comparing a new momentum indicator, based on Price and Volume trend. 

Whats PVT?

Price Volume Trend (PVT) is used to measure momentum or buying and selling pressure. When price adjusted volume on up days outpaces price adjusted volume on down days, then PVT rises. When price adjusted volume on down days outpaces price adjusted volume on up days, then PVT falls. What this means is that when PVT is up, buying pressure is up and when PVT is down, then selling pressure is up. The basic theory behind the Price Volume Trend indicator is that volume precedes price. This is significant because it allows the PVT to be used for a couple of different purposes. It can be used for general trend identification or confirmation. It can also be used to anticipate price movement after divergences.

PVT vs Sto


Formula for calculating PVT

PVT = [((CurrentClose - PreviousClose) / PreviousClose) x Volume] + Previous PVT

cons - no limits on up or down.

PVT behaves more like OBV, But due to its simplicity, you are bound to pick a ticker quicker with PVT than with OBV, with ofcourse the risk, bottom line comes down to your ideal entry (i mean timing the stocks).

When I say risk, this is what I mean.

This indicator has its own advantage.