What is OBV (On-Balance Volume)?
On-Balance Volume adds volume on up closes and subtracts on down closes — running total.
Formula
If close > prior close: OBV = prior OBV + today's volume If close < prior close: OBV = prior OBV − today's volume If close = prior close: OBV = prior OBV (unchanged)
Indian market context (NSE)
Reference levels: Nifty 50 at 24,300, Reliance Industries at ₹1,300, Bank Nifty futures at 55,000 (lot size 30). Examples below show how OBV (On-Balance Volume) shows up on Indian index, equity, and futures books — update to live quotes in your journal.
Nifty 50 perspective
On-Balance Volume on Nifty (24,300): on the 15-minute chart, combine with session VWAP and 9:15–10:00 liquidity — index on-balance volume signals misfire on expiry Tuesdays without volume confirmation.
Reliance Industries perspective
On-Balance Volume on Reliance at ₹1,300: daily vs hourly settings diverge around results and ex-dividend dates; note corporate events in journal when on-balance volume readings spike.
Bank Nifty futures perspective
On-Balance Volume on Bank Nifty futures (55,000): first-hour signals differ from post-14:30 behaviour; avoid standalone entries when banking names lead the move.
How to validate
- Forward-test OBV (On-Balance Volume) on paper or sim for two weeks after rule changes.
- Validate only on trades where OBV (On-Balance Volume) settings matched the written playbook.
- Split results by trending vs range weeks on Nifty before trusting the signal.
- Require higher-timeframe bias agreement if that is part of your rule.
How to track in TradeLyser
- Add OBV (On-Balance Volume) reading to trade entry notes (value + timeframe).
- Create tags: “OBV (On-Balance Volume) aligned” / “OBV (On-Balance Volume) ignored”.
- Monthly: filter trades by alignment tag and compare win rate and avg R.
- Screenshot chart context for mentor review on disputed trades.
Best practices
- Combine OBV (On-Balance Volume) with higher-timeframe bias — not as a lone trigger.
- Avoid curve-fitting settings on less than three months of tagged data.
- Refresh playbook screenshots when changing OBV (On-Balance Volume) parameters.
- Skip trading when OBV (On-Balance Volume) conflicts with written risk limits.
Common pitfalls
- Treating OBV (On-Balance Volume) as a guaranteed reversal signal.
- Optimising parameters on one bullish month only.
- Trading against higher-timeframe bias because OBV (On-Balance Volume) “said so”.
- Failing to log when you overrode OBV (On-Balance Volume) discretionally.
How to use this in TradeLyser
Screenshot OBV trend with price at entry; review divergence tag quarterly.
Related terms
The accumulation/distribution indicator estimates whether volume is flowing into or out of a security. Rising A/D with flat price can hint at quiet accumulation.
A breakout occurs when price closes beyond a boundary — range high, triangle, or prior day level — that traders were watching.
Chaikin Money Flow sums money flow volume over period divided by total volume.
Volume is the number of shares or contracts traded. Rising price on rising volume suggests conviction; thin volume breakouts fail more often.
FAQ
OBV absolute level?
Slope matters more than level — compare trend direction.
OBV on index?
Works on liquid index volume — note session.
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