On Balance Volume (OBV)
Info
The On Balance Volume (OBV) is a Indicator for MetaTrader 5 that on balance volume (obv) is a momentum technical indicator that relates volume to price change. The indicator's calculation is straightforward.
Usage
This tool is typically used for enhancing chart analysis and decision making.
Platform
This Indicator works exclusively on MetaTrader 5 (both build 600+ and newer versions).
Setup
Place the downloaded file in MQL5/Indicators folder via File ? Open Data Folder in MetaTrader 5.
How to Install and Use On Balance Volume (OBV)
1. Installation: Place your file in the MQL/Indicators folder via "Open Data Folder" and restart your terminal.
2. Loading: Find the indicator in the Navigator, drag it onto your chart, and configure the input parameters in the popup window.
3. Customization: Press Ctrl+I to open the indicator list, select your tool, and click "Properties" to change colors, levels, or visual styles.
4. Updating: Replace the old file in the Indicators folder with the new version and restart the platform to apply changes.
Frequently Asked Questions
Q: Why is my indicator not showing? A: Verify the file is in the MQL/Indicators folder, or try right-clicking the "Indicators" tree in the Navigator and clicking "Refresh."
Q: Do custom indicators slow down the platform? A: Too many complex indicators can impact performance; remove unused ones via the "Indicator List" (Ctrl+I).
Q: Can I use MT4 indicators on MT5? A: No, MQL4 and MQL5 are distinct languages; ensure the indicator is compiled specifically for your platform version.
What this tool does
On Balance Volume (OBV) is a momentum technical indicator that relates volume to price change.
Typical Use Case
This Indicator excels in automated trading and technical analysis on MetaTrader 5.
Compatible Platform & Setup
This Indicator works on MetaTrader 5. Place the file in the MQL5/Indicators folder and restart the terminal.
Description & Settings
Related: Institutional Harmonic Volumetric Gravity Center Indicator - another powerful indicator for MetaTrader 5 traders.
On Balance Volume (OBV) is a momentum technical indicator that relates volume to price change.Also recommended: MACD Institutional: High-Volume Activity Filter - similar indicator with strong performance on MetaTrader 5.
The indicator's calculation is straightforward. If the current bar's closing price is higher than the previous bar's, the current bar's volume is added to the previous OBV value. Conversely, if the current bar's closing price is lower, the current volume is subtracted from the previous OBV.
The underlying principle of OBV analysis is that changes in OBV precede price changes. A rising OBV is believed to indicate smart money flowing into the security, followed by a surge in both the security's price and the OBV when the public enters the market. Conversely, if the security's price movement precedes OBV movement, it is considered a 'non-confirmation', which can occur at bull market tops or bear market bottoms.
The OBV trend is considered rising when each new peak and trough are higher than the previous ones. Similarly, a falling trend is identified when each successive peak and trough are lower than the previous ones. When the OBV fluctuates without making successive highs or lows, it is considered to be in a doubtful trend.
A trend is considered broken in two scenarios. Firstly, when the trend shifts from rising to falling or vice versa. Secondly, if the trend transitions to a doubtful trend and remains so for more than three days. A brief doubtful trend followed by a return to the previous trend is not considered a break.
When the OBV changes trend, it is considered a 'breakout', and investors should take positions accordingly. Long positions are recommended on OBV upside breakouts, while short positions are suggested on downside breakouts. These positions should be held until the trend reverses.
Calculation:
- If the current close price is higher than the previous one:
OBV (i) = OBV (i - 1) + VOLUME (i)
- If the current close price is lower than the previous one:
OBV (i) = OBV (i - 1) - VOLUME (i)
- If the current close price is equal to the previous one:
OBV (i) = OBV (i - 1)
where:
- OBV (i) - current period's OBV value
- OBV (i - 1) - previous period's OBV value
- VOLUME (i) - volume of the current bar
You may also like: Imbalance Finder - excellent alternative for indicator users on MetaTrader 5.
⚠ Limitations & Risk Warning
- 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.