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Price and Volume Trend, also called PVT, is a technical analysis indicator that is similar to the On-balance Volume. While the On-balance volume adds up the volume value for each bar times 1 or -1 depending on whether the close is higher or lower than the previous close, the Price and Volume Trend adds up the volume value times the percentage change of the close price compared to the previous close.
The volume is added according to the daily return of the security price, thus the more the security price increases the more the PVT index value increases and the lower the daily return is the more the PVT index value decrease.
PVT interpretation is similar to the OBV. The more the PVT increase in value the more the bulls dominate the market and the more the PVT value decrease the more the bears are dominating the market. As with the OBV indicator, a divergence between the PVT and prices is a signal that the security is about to reach its tops (bearish divergence) or its bottoms (bullish divergence).
Price and Volume Trend indicator accepts one parameter. This parameter is a lookback value that defines the number of bars to use in the cumulative calculation. For example: PriceVolumeTrend(5), calculate the sum of the (perf(close, 1) * volume) formula for the last 5 bars.
If you want to use all the available bars for the cumulative sum, use a negative value for the lookback parameter. Example: PriceVolumeTrend(-1).
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
