Home/Glossary/On-Balance Volume
Home/Glossary/On-Balance Volume
Technical analysis

On-Balance Volume

By Jarosław Wasiński • Published: • Updated:
An indicator that adds the period’s volume when the close rises, subtracts it when the close falls and commonly leaves it unchanged on an equal close. Its meaning depends on the volume source: broker tick counts are not the same as actual traded quantity. Divergence is a hypothesis to test, not proof of an impending reversal.
Example. Starting OBV at zero, closes move 100 → 101 → 100 → 100 with the next three bars’ volumes 1,000, 600 and 900. OBV becomes 1,000, 400 and 400. The last bar’s volume is not added when Close is unchanged under the classical convention.

Signing the entire bar volume

OBV adds the entire V when Close exceeds the previous Close, subtracts it when lower, and commonly leaves OBV unchanged for an equal close. It does not separate actual purchases and sales within the bar. A small positive movement therefore assigns the same sign as a large advance.

What V represents

Exchange data can report executed contracts or units defined by the feed. Spot FX commonly supplies a provider’s count of quote changes or updates. This differs from traded quantity and does not consolidate the global market. The feed’s documentation, missing data and aggregation conventions all affect interpretation.

Levels and comparisons

The initial OBV value is arbitrary, so absolute levels from two histories may be incomparable. Direction, slope or divergence can define a rule to evaluate. Rising OBV does not establish institutional buying or guarantee that the next price rises. Keep the volume definition constant in testing and include full trading costs rather than interpret a signed proxy as observed order flow.

Source of the definition

MetaTrader: volume conventions. Documentation of the construction or concept is not a guarantee of strategy results.

FAQ

Does OBV measure buying volume minus selling volume?
No. It signs the entire bar’s V according to the closing-price change.
Why can brokers’ OBV values differ?
Price feeds, tick counts, candle boundaries and history length can differ.

← Back to the full glossary

Jarosław Wasiński

Editor-in-chief, ForexMechanics.com • Macro & FX analyst

Independent analyst and practitioner with over 20 years of experience in financial markets. Actively involved in Forex since 2007, with a focus on fundamental analysis, OTC market structure, and disciplined capital risk management.

  • Creator and editor-in-chief of MyBank.pl, providing reliable financial education since 2004.
  • Author of hundreds of in-depth market commentaries, structural analyses, and educational materials for traders and investors.
  • Advocate for market transparency, promoting education grounded in hard data and institutional reports (BIS, ESMA, CFTC).

All content is educational and informational only – it does not constitute investment advice or a recommendation. Remember: leveraged trading (Forex/CFD) carries a high risk of rapid capital loss.