Business and Personal Finance Dictionary

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• ON-BALANCE-VOLUME
  
  Is an analytical technique which creates a time series to determine whether a stock or futures contract is subject to Accumulation or Distribution. The basic rule is straightforward. If the instrument was up on the day, then the entire volume is assigned a plus sign and is positively interpreted. If the instrument was down on the day, then the entire volume is assigned a minus sign and is negatively interpreted. These pluses and minuses are summed on a cumulative sequential basis. The analysis assumes that if the instrument is trading at the same price over time and the On-Balance-Volume (OBV) series is increasing, then the instrument is being accumulated and is poised for an upside move. Conversely, if the instrument is trading at the same price over time, and the OBV series is decreasing, then the instrument is being distributed and is poised for a downside move. There are many variations of this theme. Some use each transaction while others use only large or block trades.
  
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