Price and Volume Trend

Introduction
The trend of price and volume (PVT) is an indicator of the aggregate amount of the total, adjusted in accordance with the relative changes in closing prices. This indicator reminds the meaning Weighted volume (OBV).

Description
Trend Indicator of price and volume is calculated by adding the percentage of volume when the price rose with the increase, and subtracting percent of the volume when the price closes down (for comparison, the volume indicator weighting adds full amount when the price closed with increase, and deduct the full amount, when prices closed down.) Number of the volume, add or subtract to the indicator PVT, depends on the amount by which the price increased or decreased on the previous day's closing.

• When the price changes to a small percentage, an indicator PVT adds only a small portion of the amount to the value of the indicator.
• When the price changes to a higher percentage, the indicator most of the PVT adds volume to the value of the indicator.

PVT divergence between the indicator and the price shows the potential for further increase in the price

Calculation
Trend Indicator of price and volume is calculated by multiplying the daily volume on the percentage change in closing price in relation to the closure yesterday and adding this value to a cumulative total number. For example, if the market closed with a tool to increase 0.5%, and the volume amounted to 10,000 shares, then we would have added 50 (ie, 0.005 * 10.000 = 50) to the value of the indicator PVT. If the price closed down by 0.5%, then we would be deducted from the value of the indicator 50 PVT.

Interpretation
• When the PVT is falling, then the outflow of money from the market (falling price accompanied by an increase in volume).
• When the PVT is increased, then the flow of money in the market (prices and volume increase together).

The trend of price and volume is a leading indicator for future price movements. Although the interpretation of PVT is similar to the indicator and the indicator OBV Accumulation / Distribution indicator PVT more accurately demonstrates the flow of money. Indicator PVT adds only a proportional amount of volume to the value of the indicator, while the indicator OBV adds the same amount of volume, no matter whether the market rose with the increase of one point or price increases several times.

1. PVT rising indicator means new money, sometimes referred to as "fast money" coming into the market. As a result, this would mean that the current trend will continue. Accelerating raise indicates the market participants attracted by the new price trend.

2. If then the indicator is aligned PVT is often an early warning that the trend is over.

3. Reducing PVT indicator indicates that the "fast money" away from the marketplace.

4. When the PVT is moving sideways or declining, while the price rises, the increase in prices was not confirmed by volume and this may indicate a top or base of the market.

Alerts
The main signal occurs when a divergence between the indicator and the price PVT.

In the above example, Bull divergence was established in two cases (indicator PVT develops trend upward, while the price trend to develop down), accompanied by a strong increase in prices in both cases.

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Tactics in the Trade Stochastics

Many people think that the only price bars could predict the future movement. Typically, novice traders experimented with every indicator of a textbook, and when unable to make the market conform to your math, it dropped out of this lesson and go to the graphical models. In fact, focusing on pricing models, it seems they have become intolerable to all other methods of trade.

But they might change their mind if to get a very effective technical tool that can save them from the set of loss-making transactions - is often used unnecessarily, and at the same time underestimated Stochastics.

What exactly is a Stochastic oscillator? This may seem a simple matter, but the answer is not as simple. The term describes a mathematical process, which is an infinite progression of random variables. Let's put it and move on to the applied side of the issue. Stochastics measures, as the market closes each price bar on a band for a while.

This is urgent information for all types of traders. Short-term traders use it to see how the rate of money pass through their one minute charts. Long-term traders use it to identify cycles as weekly Stochastics show the balance of power in the market. But this valuable tool will not reveal their secrets so easily and therefore require thoughtful interpretation.

The parameters that you specify, do not matter, because Stochastics create working models of any set of input data. Different switch produce different levels of "noise" in the future. For example, pay attention, as 5 -, 13 - and 21-day Stochastics on schedule "PetsMart" show at the intersection of the key turning point.

The basic approach here is to achieve consistency of your data with your trading style. For example, intra-day traders trade on small changes in the direction of the market and profit from short-term facilities Stochastics. On the other hand, the installation of long-term positional parameters help traders avoid false alarms.

Many traders are vprosak when Stochastics is approaching the level of extreme, because they are waiting for a turn instead of continuing the trend. Oddly, the most rapid price movement often occurs immediately after these levels violated. So, how can you avoid bad signals and use Stochastics in accordance with its purpose? Look for unusual patterns.

Stochastics, which is the middle of its range tells you that the trend - is your friend. See, when the fast line is separated from the slow line at the zone. This shows the growing momentum in the direction of short-term trend.

How can you use this information? Look for opportunities to buy in the fall (with an upward trend), or to sell at high spate (in descending trend), while the indicator does not turn. One efficient variant of this model is 1-2-3 the motion, which is an indicator of an extremum, and then makes a small roll, and then re-breaks in an area of extremes.



Advantage of the price surge, which burst through the level of Stochastics perekuplennosti or pereprodannosti. Look for Quick-line when it ottolknetsya from the slow line directly in the territory. This signal is often a thin line with the final explosion of buying or selling before the market fully spread, or move into Flat. This echoes the best in the fifth wave Elliott wave theory.

Stand aside when Stochastics form lateral line through the top or base of the indicator, but take action quickly when they begin to erupt in another direction. This Meza (marked Mesa) a turn signal often coincides perfectly with the breakthrough of key support or resistance. One problem is that you can not say how far the movement can continue on the basis of one indicator. Look at the pricing models, Elliott Wave, Fibonacci levels, to find the natural goal for future fluctuations.

Very effective models for the oscillator are double tops and double base. As with the price bars, should find a lower second maximum, which signals the top, and a higher second minimum, which indicates to the base.

Be patient, when the model is evolving, and let the lines move away far enough from the extreme levels to confirm the signal. This model is similar to Meza-turn as described above, but with one crucial difference - this model often leads to greater subsequent motion, because it reflects a larger, underlying, divergence.

Trading on the Divergence

Correct divergence. Hidden divergence. "What a wonderful tool, it really works!", "I see a divergence around a long time and would be desolate, if traded at all signals. This will not work for me!" Such comments and the like can often be heard during the discussions between the traders themselves. I hope that we will be able to clarify some uncertainties with regard to divergence, and you will be able to successfully add the correct and hidden divergence in its arsenal of technical tools of trade.

Divergence is to compare the price with technical indicators. It can also be compared with other graphic symbols, or the difference between the two characters. Divergence occurs when the graphic symbols that you are comparing, moving in opposite directions. Divergence could signal an impending change in trend, the development trend of change, or that the trend should continue. Signal divergence suggests that there is a need to monitor the possibility of trade in the direction of the signal. Divergence could continue through several maxima and minima of oscillations, so price action should confirm the received signals. This can be done in many ways, some of which may be: the price indicates a higher maximum / minimum, or a lower maximum / minimum price testing the last maximum / minimum fluctuations, the price broke the previous maximum or minimum bar. Many of these acknowledgments would coincide with zero crossing of MACD-histogram.

In trading on the divergence can be used many indicators such as Stochastics, MACD, RSI, CCI, and others. Like most indicators, signals a major divergence in the interim format will indicate a significant movement of prices. In the example below, the price is compared with indicators Stochastics and MACD. On each graph is 50-periodnaya exponential Moving Average (blue), 200-periodnaya EMA (red) is used with periods of 9/3/3 Stochastics and MACD-Histogram parameters 7/10/5. There are many other options for Stochastics and MACD, which will also work well for signals divergence.

Correct divergence (RD) is best used for testing the previous maximum or minimum, that the majority of traders is called as a double or triple peak / base. Quite often you can see 3 or 4 higher price peak during the rising trend with 3 or 4 lower maximums indicator, either 3 or 4 to lower the minimum price at the time of the downward trend with 3 or 4 higher minimums indicator. This is called the 3-rd or 4th correct divergence. Such a divergence indicator is correct signals to us that the trend becomes weak, and the potential exists to change the trend and should deal with this. For some traders this may mean is that it is necessary to more closely pododvinut stop-order, while others may prefer to record a profit.

Hidden divergence (RD) is best used during the development trend of transactions in the direction of the trend. In most cases, the price in accordance with hidden divergence will move at least to the last maximum or minimum fluctuations, thus giving us the opportunity to calculate their ratio of risk to the profitability of such transactions. If not enough space for movement between the point where the received signal, and the last maximum or minimum fluctuations, most traders prefer to omit such a transaction. Another warning to skip the transaction, filed a hidden divergence is the divergence of the correct for the last 3rd peak during the rising trend or the latest 3rd minimized when descending trend that signals a possible change of trend.

Many traders already use the correct divergence in their trade. Correct divergence used in combination with hidden divergence may be slightly better percentage of winning deals. As far as possible, depending on the style of trading, the trader used.

As long as the price indicates a higher maximum and higher minimum, it is considered that the temporary format market is in an upward trend. When the price makes a lower maximums and lower minimums, the market is located in the descending trend.

The next two graphics represent an example of the correct divergence. Only what we see right divergence when comparing the two maxima in the upward trend or two minima in the descending trend does not mean the need for automatic opening position. If the trend is strong enough, you can get, just, lateral movement of prices, or one - two bars recovery before continuing trend. Correct divergence may be a useful tool for us to respond to the question whether the trend further momentum or not.

Correct divergence in the ascending trend (higher maximum and higher minimum) compares the higher peaks in the price schedule with the maximum of the indicator. Please note that Stochastics and MACD indicate a lower maximum, while the price points higher up, which indicates a weakening trend.

Correct divergence during the downward trend (lower maximums and lower minimums) compares a lower minimum price schedule with a minimum of an indicator. Please note that the MACD and Stochastics and show a higher minimum, while the price points lower minima, which indicates a weakening trend. This figure also shows an example of the 3-rd correct divergence - a lower minimum price schedule has a higher minimum of MACD. Correct divergence may also be the 4th and 5th divergence before the actual change in trend will occur.

Hidden divergence (HD) compares higher minimum prices with an upward trend with lower minimums and lower indicator of the maximum cost in the descending trend with higher maximums indicator. Hidden divergence helps to determine whether the current trend continue. The following graph shows how hidden divergence can confirm what flags recovery have a high probability of continuing to trade in the direction of the trend. When you run trend line on the display, which you use, it is desirable that its length is consistent with the trend line delineated on the price chart. Please note, as an entry into the market based on price activity for many traders is combined with the zero crossing of indicators used in the MACD.

Another time, when you can look for divergence - after a period of consolidation or lateral movement in the market, which is also testing a previous maximum or minimum in the range of consolidation. The following graph demonstrates the advantage of the trend line, as soon as you have two points, through which it can hold (red arrows on the left). Each touch of the price trend line is the time to watch the Bcc divergence. Testing trend line price of about 1:30, shows an example of how to correct the divergence may serve as a warning that the signal is hidden divergence, if it is accepted for trading, will not reach the goal the last minimum fluctuations.

The following graph shows how to use the divergence, combined with trend lines and the expected intersection of the MACD indicator, zero, at the same time as the trend line is violated. Divergence implies that the price would be effective to overcome the resistance trend line. Pay attention to the value set on a larger temporal format in paste. Going to a smaller format in the interim would find a better entry point with less risk.

The chart shows how the divergence signal of two identical units for long positions in low-risk breakthrough trend line (blue line), which also coincides with the intersection of the zero indicator MACD. The second long position in low-risk also has the Bcc divergence from the previous minimum in their favor. Please note that the 3-rd Correct divergence shown on a larger time scale (in oval) also deserves attention.

Also, this graph shows a lot of other regular and hidden divergence, which are labeled accordingly. Transactions on the divergence, which are combined with trend lines, Fibonacci levels, support, resistance and / or graphic patterns will be more reliable and provide a higher percentage of winning deals.

Remember that, as described in most books on technical analysis - "Every trader must find what works for him." There is nothing wrong if you take any idea from one strategy and some idea of the different strategies to make their own trading system. International traders are called "commercial cocktail."

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