Volume Oscillator

capital market training

The volume oscillator is a volume-based technical analysis tool that utilised the distinction amidst 2 MA’s of a safety’s volume to decide further trends. The 2 MA’s are usually 5 and 20 days long for future markets. The most common figure of 2 MA’s is 14 and 28 days/weeks. The long-time MA functions as the base to decide shot span MA fluctuations. The distinction amidst the long and short span MA can be expressed in sorts of percentages or points.

Benefits of Volume Oscillator indicator

  • One of the prime perks of utilising volume-based tools like volume oscillators aids in pinpointing whether the share is effectively moving downward or upward. VO implies that the trend would pursue to move in the similar way of altering its way after traversing the certain distance in a particular direction.
  • The Volume Oscillator indicator precedes rate activity in depicting a viable change in the way of a specific stock. Indeed, this occurs when the volume oscillator manifest nonconformity to rate activity. This signifies that a downward or upward trend is accurately evident on VO histogram prior it’s shown on charts of rate indicators.
  • The VO doesn’t have any exotic mathematical calculations and formulas. Instead, it simply deploys the exponential MA of data for the predetermined count of days.
  • So as to preserve market turnaround, technicians should utilise both volumes as well as rate indicators. So as to decide the ultimate trend strength, volume-based indicators like MVO, PVO, or VO should not agree with the rate indicators.