On-Balance Volume

In the dynamic realm of financial markets, where the interplay between buyers and sellers is akin to an intricate dance, traders and analysts wield an array of tools to navigate these complexities. Among these tools, the Balance of Power (BOP) Indicator emerges as a pivotal component of technical analysis. This article endeavors to illuminate the nuances of the Balance of Power Indicator, including its calculation, significance in assessing market dynamics, applications, strategies, and considerations.

Most traders know that the methods of technical analysis are based on the study of changes in the movements of price charts and the Market Depth. However, another important object of technical analysis is trading volumes. Experienced traders believe that there are two objective factors in the market: the price and volumes. Let's see in more detail what a trading volume is, how to analyze it, and which tools for its evaluation are available to a modern trader.

Stock market price charts are like a cardiogram on a medical monitor: the more frequent the change, the more lively the market. But if you know where to look, the monitor will show much more: breathing rate, blood oxygen saturation, and blood pressure levels. It is the same with a chart in the forex market: it does not only show the rise or fall of the price.

The On Balance Volume indicator is integrated into the standard package of Meta Trader terminal algorithms, so it is available to all users of this program. The tool is designed to determine the balance volume of the market. It is a dynamic algorithm that constantly changes its readings depending on the price of the trading asset and total market volumes. Let's consider in detail the principle of work of OBV indicator, signals, and ways of trade on its basis.