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The On-Balance Volume indicator (OBV) is one of the most effective and popular models for measuring changes in money-flow. Volume is added if the closing price is higher than that of the previous trading day, or subtracted if the closing price is lower than that of the previous day. In order to determine the BUY and SELL signals, GridStock compares 2 OBV averages, a short average of 3 days and a longer average of 'n' days. A BUY signal is indicated when the average OBV in the last X days is smaller than the average OBV in the last 3 days. A SELL signal is indicated when the average OBV in the last X days is larger than the average OBV in the last 3 days. Calculation: If today’s closing price is larger than yesterday’s: OBV = OBV1 + Volume If today’s closing price is smaller than yesterday’s: OBV = OBV1 - Volume Where:
To see a calculation of OBV in Excel, click here:Attach:OBV.xls |