The Volume Oscillator
is the difference between 2 moving averages (MA's) of a stock's
volume, expressed in points or percentages. The Volume Oscillator
is normally used to figure out if the trend of volume is rising
or falling. If the Volume Oscillator rises above zero, the shorter
MA has risen above the longer MA (the shorter trend is showing more
volume). Some traders believe that rising volume in addition to
rising prices is bullish, as is falling price and falling volume.
On the other hand, increases in volume with falling prices, or volume
decreases when prices rise signify a bearish market. The reason
for this belief is that rising prices and increased volume implies
more buyers, but falling prices and increased volume means more
sellers. If you are day trading, you are likely to find the volume
oscillator of limited use, as the inventor of the SureFireThing Camarilla Equation
found no correllation between volume and price that might enhance
the accuracy of a day trader's levels
To calculate the Volume
Oscillator in points, subtract the longer volume MA from the shorter
volume MA. To see it in percentages, divide the difference between
the two MA's by the shorter MA.
previous
next
|
|
|