Klinger Volume Oscillator (KVO)

Related: Footprint X Ray: Advanced Order Flow and Volume Delta Analysis - another powerful indicator for MetaTrader 5 traders.

The Klinger Volume Oscillator (KVO) was developed by Stephen Klinger. This indicator possesses two seemingly contradictory characteristics: it is sensitive to short-term tops and bottoms while simultaneously displaying long-term money flow with high accuracy.

Also recommended: Volume Strength Compass by Bhanu Code Lab - similar indicator with strong performance on MetaTrader 5.

The KVO indicator is based on the following principles:

Price range is a measure of movement, and volume is the force behind that movement. The sum of High + Low + Close determines a trend. Accumulation occurs when the current day's sum exceeds the previous day's sum, and distribution occurs when it is less. If the sums are equal, the current trend is maintained.

Volume causes constant intraday price variations, indicating buying and selling pressure. The KVO determines volume force by the difference between the number of accumulated and distributed shares each day. High and increasing volume force precedes an uptrend. This value then gradually decreases, corresponding to the final stages of an uptrend, and initiates the formation of a downtrend. Later, the rise in volume force, indicating definitive accumulation, should repeat before the formation of a bottom.

After transforming volume force into an oscillator, which represents the difference between 34-day and 55-day exponential moving averages with a 13-day signal line, it becomes easy to track market entry and exit "volume force." Comparing this force with price movements can help reveal divergences between tops and bottoms.

Klinger recommends following these concepts when applying the KVO:

The most reliable signals appear in the same direction as the trend.

The strongest signal is a divergence between new price tops and bottoms and the indicator's graph, especially in overbought/oversold areas.

In an uptrend, it's time to buy when the KVO drops to very low levels, below zero, and then turns upward, crossing its signal line. In a downtrend, it's time to sell when the KVO rises to very high levels, above zero, and then turns downward, crossing its signal line.

We must remember that the KVO works best when trading in the direction of the trend and is less effective when trading against the trend.

This indicator allows selection from ten distinct variants for the smoothing type of the histogram and signal line of xKVO:

- Simple Moving Average

- Exponential Moving Average

- Smoothed Moving Average

- Linearly Weighted Moving Average

- JMA Adaptive Moving Average

- Ultra Linear Smoothing

- Parabolic Smoothing

- Tillson's Multiple Exponential Smoothing

- Smoothing with Tushar Chande's Algorithm

- Smoothing with Perry Kaufman's Algorithm

It should be noted that the phase1 and phase2 parameters have entirely different meanings among the various smoothing algorithms. For JMA, phase is an external variable whose value ranges from -100 to +100. For T3, it is a smoothing ratio multiplied by 100 for better visualization. For VIDYA, it is the period of the CMO oscillator, and for AMA, it is the slow EMA period. These parameters do not affect the smoothing calculation in other algorithms. In AMA, the fast EMA period is fixed at 2 by default. The power growth ratio for AMA is also 2.

This indicator uses the smoothalgorithms.mqh class library (must be copied to terminal_data_folder\mql5\include). The use of this class is described in more detail in the article.

You may also like: institutional harmonic volumetric gravity center indicator - excellent alternative for indicator users on MetaTrader 5.

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• This tool is provided for educational and testing purposes only.
• Past performance does not guarantee future results.
• Trading involves substantial risk of loss. Use on a demo account first.
• Results may vary depending on market conditions, broker, and settings.
• We recommend thorough backtesting and forward testing before using with real funds.