On-Balance Volume
OBV · module 33 of 33 · levels
A running total that adds volume on up-closes and subtracts it on down-closes.
- OBV
- SMA 20
- ▲/▼ where the rule triggers
Adds volume on up closes and subtracts on down closes. OBV rising ahead of price hints at accumulation.
How to apply it
- 1. Add it. Start with Raw OBV on 15m with a 20-period average (Intraday).
- 2. Read the market first. OBV making new highs alongside price supports the move; OBV flat while price rises suggests the advance is not accompanied by increasing participation.
- 3. Adjust for ranges. Drifts without meaning; a rising OBV inside a range is not a breakout signal.
- 4. Manage the trade. Place the stop at 1.5 × ATR and the target at 3.5 × ATR, and only act when the chart above shows the trigger.
How it is calculated
OBV = OBVprev + Volume if C > Cprev; − Volume if C < Cprev; unchanged if equal.
Inputs
- · Volume source
Volume caveat. This module uses volume. In retail spot forex that means tick volume — the number of price updates from one broker's feed — not traded contract volume. Readings differ between providers.
Reading it correctly
In a trend
OBV making new highs alongside price supports the move; OBV flat while price rises suggests the advance is not accompanied by increasing participation.
In a range
Drifts without meaning; a rising OBV inside a range is not a breakout signal.
Settings by style
| Style | Suggested values |
|---|---|
| Intraday | Raw OBV on 15m with a 20-period average |
| Swing | Raw OBV on 4h/1D with a 20-period average |
These are conventional starting points, not optimised values. Test any change on your own pair and timeframe before relying on it.
Worked example
OBV starts at 0. Candle 1 closes up on 1,500 ticks: OBV = 1,500. Candle 2 closes down on 900: OBV = 600. Candle 3 closes up on 1,200: OBV = 1,800. Note that a 1-pip up-close adds the full tick count, exactly as a 50-pip one would.
When it failed
An OBV divergence on 15m EUR/USD was traded as a reversal. The divergence came from three narrow up-closes on high tick counts during a quiet period — a broker feed artefact rather than a shift in participation.
Limitations
- Volume caveat: retail forex OBV uses tick volume from one broker's feed, so it is a proxy for activity, not traded volume, and differs between providers.
- Direction of close matters, magnitude does not — a 1-pip and a 50-pip up-close are treated identically.
- The absolute level is arbitrary and depends on where the calculation started.
Works well alongside
- · Market structure
- · ATR
- · ADX / DMI
Redundant with
- · Accumulation/Distribution
- · Money Flow Index
Stacking these produces agreement by construction, which is not confirmation.
Practice exercise
Compare OBV on the same 15m EUR/USD session from two data sources. Record whether any divergence you find appears in both, and treat those that do not as feed artefacts.
Check your understanding
1. OBV in retail forex is based on:
- · Traded contract volume
- ✓ Tick volume from a single broker's feed
- · Open interest
- · Spread data
Spot forex has no central tape, so tick counts stand in for volume and vary by provider.
2. OBV ignores:
- · The direction of the close
- ✓ The size of the price change
- · Volume entirely
- · Session times
The full volume is added or subtracted based only on whether the close was higher or lower.