reference · Technical analysis
On-Balance Volume: Cumulative Signed Volume
On-Balance Volume adds a bar’s volume when its close rises and subtracts it when the close falls. The cumulative line assigns all of a bar’s activity a sign based on one closing-price comparison.
Understand what is being signed
Under the standard rule, an up close adds current volume to previous OBV; a down close subtracts it; an unchanged close leaves the running total unchanged. MetaQuotes describes the OBV calculation. The sign is a classification rule, not a record that every transaction in an up bar was buyer-initiated.
Every completed transaction has a buyer and seller. OBV does not inspect their identities, holdings or intentions. It also does not separate trades executed at the bid from trades executed at the ask. Describing an OBV increase as verified institutional accumulation goes beyond the information used in the formula.
Build a hypothetical running total
Start with an arbitrary OBV baseline of zero and a prior close of 50. The next close is 51 with volume 200, so OBV becomes 200. A subsequent close of 50.50 with volume 150 reduces it to 50. If the following close remains 50.50 on volume 400, the conventional unchanged-close rule keeps OBV at 50.
Finally, a close of 52 with volume 100 increases OBV to 150. The series is therefore 200, 50, 50, 150. Choosing a starting baseline of 1,000 instead produces 1,200, 1,050, 1,050, 1,150. The shape and changes are identical; the absolute displayed level shifts by a constant.
The 400-volume unchanged bar illustrates a limitation: substantial trading can leave the indicator untouched. Conversely, a tiny uptick in closing price can assign a large bar's entire volume a positive sign. Price magnitude is not part of the basic addition or subtraction.
Data definitions matter
Share volume, futures contract volume and FX quote-event counts are different inputs. With tick-count data, OBV summarizes signed quote activity in the selected feed. It does not become a consolidated global currency-flow measure simply because the chart uses a currency symbol.
Corporate actions, futures rolls, missing observations and changes in session inclusion can interrupt comparability. A new chart history can also move the baseline. Before comparing two OBV screenshots, align their start date, price adjustment policy, timeframe and volume definition.
Evaluate divergence without choosing it afterward
An analyst may compare price highs with OBV highs, but the pivot-selection rule must be stated. Choosing one pair of peaks for price and another convenient pair for OBV can manufacture a divergence. Save the observations and the confirmation time used to identify each pivot.
Compare Money Flow Index, which uses typical-price-weighted volume and a bounded transformation. Review volume data definitions, then record a reproducible comparison in the journal workflow. OBV can summarize a dataset; whether its pattern adds useful predictive information is a separate empirical question.
Questions and answers
Does a negative OBV mean net money left the market?
No. The level depends on an arbitrary starting baseline and signed-volume rules. It is not an accounting statement of capital entering or leaving.
Why did a high-volume bar leave OBV unchanged?
If its close equaled the prior close, the conventional OBV rule adds nothing despite the bar’s recorded trading activity.
Sources and further checks
Use the current source for your exact instrument, account and platform. Referencing a general specification does not establish support for every TradeCopier workflow.
- MetaQuotes: On Balance Volume · Checked September 19, 2026
Found an error? Send a correction with this page's address and a primary source. See our editorial standards for how we handle examples, claims and revisions.
