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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.

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