How do you you guys use OBV on balance volume? What numbers do we look for to enter or exit a trade? Above 500? Below 200?
OBV on balance volume
- Thread starter daytrademargin
- Start date
I used Google to find the following resource info about using OBV:
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:on_balance_volume_ob
http://www.cmsfx.com/en/forex-center/forex-articles/on-balance-volume/
http://www.wallstreettape.com/tutorials/ta/c29.asp
EliteTrader.com search only came up with other messages by traders asking similar questions about how to use OBV.
They too got no replies.
Thus, seems like the only info out there is about defining what OBV is but there's nobody actually talking about their use of it in their trading.
Simply, ET isn't the only discussion forum and you may have to join another discussion forum to find someone actually using it for trading purposes along with posting some info how they are using it.
Mark
OBV is not a signal to enter or exit a trade. It merely confirms a trend. If the OBV is moving down while the price is moving up, then the trend is suspect.
Hi Mark, I also used Google to find what you posted prior to me posting. Those links don't show exactly how to use it. They just show pictures and explain what it does. But it doesn't give hints or tips on "how" to use it. For example, do we enter a trade when the OBV is above 1,500 or is that a sell signal? Or do we enter when the OBV is obove 100? Or exit? I am familiar what it is, but not sure how to use it properly. There are no links that show about what I'm looking for. Thanks for the info anyways.
It apprears to me that OBV is similar to ADX. Or exactly as ADX. Alot of traders that use ADX also use OBV, so I was trying to figure out why they would since they are both confirming the same thing. Thanks.
I used to use it, sort of. I would add/subtract volume as those articles say, and then see if the sum was higher or lower than a moving average of previous sums. I found other things worked better, though, and haven't used it in a while.
It occurs to me that you could accomplish something similar by taking the weighted average of the price and doing a moving average of that, eg, if 100 shares are traded at 10 and then 50 at 11 and then 75 at 9, the weighted average would be 9.89, while the unweighted average would be 10. So you could look at whether the weighted is higher or lower than the unweighted average.
It occurs to me that you could accomplish something similar by taking the weighted average of the price and doing a moving average of that, eg, if 100 shares are traded at 10 and then 50 at 11 and then 75 at 9, the weighted average would be 9.89, while the unweighted average would be 10. So you could look at whether the weighted is higher or lower than the unweighted average.
OBV works well for exits.
If price is trending up
then draw a up trendline on obv, connecting the lowest lows.
OBV will tend to break that trendline before price, giving you a leading signal to exit.
If price is trending up
then draw a up trendline on obv, connecting the lowest lows.
OBV will tend to break that trendline before price, giving you a leading signal to exit.
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RE;Dont put to much faith in these indicators Bright Trading says.
DayT;
As other eliteTrader says;
found other things working better.
Depends on timeframe, cause weekly charts dont even have 500,200 on them ,looking OBV now.
Perhaps like 50 dma, could find a use for any indicator.Wisdom is profitable to direct.
Long story short;
you want downtrends in price confirmed by downtrending obv.Similiar to 50 day move average
Up price confirmed by up obv.
And like Don Bright Trading co says''dont put to much faith in these indicators.