What Is Net Volume?

The OBV line, also known as the OBV energy wave, is to quantify the value of the trading volume and create a trend line. In line with the trend line of the stock price, the market atmosphere is estimated from the relationship between price changes and the increase and decrease in trading volume. The theoretical basis of OVB is that changes in market prices must be accompanied by trading volume. If the price rises and falls without a corresponding increase or decrease in the transaction volume, it is difficult for the market price to continue to change.

Net volume

Accumulate the total daily trading volume of listed stocks day by day. When the closing price of the day is higher than the previous day, the total trading volume is positive, otherwise, it is negative, and if it is flat, it is zero.

That is: OBV of the day = OBV of the previous day ± today's trading volume, and then the accumulated trading volume will be connected daily to a fixed point daily line, and listed in a chart with the stock price curve, and watch its change.

The basic theory of the OBV line is based on the extremely high correlation coefficient between stock price changes and trading volume values, and the trading volume value is a leading indicator of stock price changes. Short-term stock price fluctuations do not completely match the rise and fall of company performance, but are affected by popularity. Therefore, it is possible to predict the fluctuation direction of stock prices from the change in trading volume.

When the stock price rises and the OBV line falls, it indicates that there is insufficient energy and the stock price may fall back.

When the stock price falls and the OBV line rises, it means that buying is strong, and the stock price may soon stop falling and rebound.

(3) When the stock price rises and the OBV line rises slowly and synchronously, it means that the stock market continues to be optimistic and still has glory.

When the OBV line soars, regardless of whether the stock price soars or falls back, it means that the energy is about to run out, and the stock price may stop rising and reverse.

OBV line is drawn based on the statistics of changes in trading volume, so the OBV line belongs to technical analysis and has nothing to do with basic analysis of economics.

OBV line is an important method for judging the short-term fluctuations of the stock market, but the use of the OBV line should be analyzed in accordance with the trend of stock prices.

(3) The OBV line can help determine the development direction of the stock market after the market breaks.

The trend of OBV can partially show the movement direction of the main funds in the market and show whether the unusual excess transaction volume is hovering at the low price or generated at a high price, which can enable technical analysts to understand the internal reasons of the market one step ahead.

The OBV line has a more standard indication of the determination of the second peak of the double top (M head). When the stock price falls from the first peak of the double top and rises again, if the OBV line can rise in sync with the trend of the stock price, the price and volume match It may continue to be a long market with higher peaks, but on the contrary, when the stock price rises again, the OBV line fails to synchronize, but sees a decline. It may soon form a second peak and complete a double top pattern, and further cause the stock price to rise. Reversed back down.

OBV line is more suitable for short-term in and out, which has nothing to do with basic analysis. At the same time, OBV can not effectively counter-reflect the current market turnover situation.

The application of energy wave pay attention to the following points:

1. When the stock price and OBV rise simultaneously, it indicates that the upward trend is stable, and the subsequent trend continues to rise: When the stock price and OBV decrease simultaneously, it indicates that the downward trend has not decreased, and the subsequent trend continues to decline.

2. The stock price rose to a new high, but the OBV did not hit a new high.

3. The stock price did not hit a new high, but OBV hit a new high. This is an overbought phenomenon and the stock price will fall.

4. The stock price hit a new low, while the OBV did not hit a low, which is a backsliding phenomenon and a buy signal.

5. The share price has not fallen much, but the OBV has fallen sharply. This is an oversold phenomenon. If the OBV decline significantly slows down after oversold, you can consider buying.