PVT Osc - Price Volume Trend Oscillator [UTS]The oscillator version of the Price Volume Trend indicator (PVT) can be considered as a leading indicator of future price movements. The PVT Indicator is similar to the On Balance Volume indicator as it is also used to measure the strength of a trend.
The difference between the OBV and the PVT is that where the OBV adds all volumes when price achieves higher daily closes and subtracts them when price registers a lower daily close, the PVT adds or subtracts only a portion of the volume from the cumulative total in relation to a percentage change in price.
The general market consensus is that this difference enables the PVT to more accurately represent money flow volumes in and out of a stock or commodity.
The PVT has been designed so that it is capable of forecasting directional changes in price. For instance, if the price of a stock is rising and the PVT begins to fall, then this is indicative that a price reversal could occur very soon.
The general consensus is that the PVT is more accurate at detecting new trading opportunities than the OBV because of the differences in their construction. The OBV is designed so that it adds the same amount of volume whether the price closes upwards by just a small fraction or by multiples of its day opening value. On the other hand, the PVT adds volume proportional to the amount the price closed higher.
General Usage
Plain old PVT can be used to confirm trends, as well as spot possible trading signals due to divergences.
A benefit of the oscillator version is that it can produce LONG or SHORT signals on zero line cross.
Or controversy, disallow LONG trades in bearish territory and disallow SHORT trades in bullish territory.
Moving Averages
4 different Moving Averages are available:
EMA (Exponential Moving Average)
SMA (Simple Moving Average)
VWMA (Volume Weighted Moving Average)
WMA (Weighted Moving Average)
Price-trend
Chauvenet RadiusThe Chauvenet criterion is a well-known criterion of selection and rejection of the data used by the Physics. It establishes that in an experiment is well to discard the data whose distance from the average is greater than a certain number of the delta.
In the stock market if prices move away from the average with a volatility too high are suspect. This principle is embodied in the Chauvenet floor with the definition of two asymptotes and two data areas rejection.
The Chauvenet Radius is the quadratic sum of the delta (distance from average) and sigmoid (volatility) and is therefore an obvious market stability index. In fact the moments when price strongly moves away from the average with high volatility coincide with the moments of high instability of the market.
It can be considered an evolution of John Bollinger method introduced during the '80.
Source: www.performancetrading.it
