Price Volume Trend (PVT)
factor.formula
PVT:
PVT initial value:
The core idea of this formula is to weight the daily trading volume according to the price change (compared with the previous day's closing price) and then add it to the PVT value of the previous day. The purpose of this is to capture the relationship between price change and trading volume, and then judge the potential momentum of the market.
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The Price Volume Trend indicator value for the current day (t).
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The Price Volume Trend indicator value for the previous day (t-1).
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Closing price for the current day (t).
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Closing price of the previous day (t-1).
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Volume for the current day (t).
factor.explanation
The Price Volume Trend (PVT) indicator better reflects the dynamic changes in volume during price increases or decreases by multiplying the price change by volume. Compared with the OBV indicator, which only accumulates volume, PVT better reflects the weighted impact of price changes on volume accumulation. Specifically, when the closing price increases, the volume is weighted according to the size of the increase. The larger the increase, the more volume is accumulated to PVT, and vice versa. Therefore, PVT can more accurately reveal the activity of market participants at different price levels, as well as the underlying market trend and momentum. An increase in PVT may indicate that the market is in an accumulation phase, while a decrease in PVT may indicate that the market is in a distribution phase. By observing the trend of PVT, investors can try to identify buying and selling pressures in the market and possible changes in price trends.