Price and Volume Trend
Encyclopedia
Volume–price trend (sometimes price–volume trend) is a technical analysis
indicator intended to relate price and volume in the stock market
. VPT is based on a running cumulative volume that adds or subtracts a multiple of the percentage change in share price trend and current volume, depending upon their upward or downward movements.
The starting point for the VPT total, i.e. the zero point, is arbitrary. Only the shape of the resulting indicator is used, not the actual level of the total.
VPT is similar to on-balance volume (OBV), but where OBV takes volume just according to whether the close was higher or lower, VPT includes how much higher or lower it was.
VPT is interpreted in similar ways to OBV. Generally, the idea is that volume is higher on days with a price move in the dominant direction, for example in a strong uptrend more volume on up days than down days. So, when prices are going up, VPT should be going up too, and when prices make a new rally high, VPT should too. If VPT fails to go past its previous rally high then this is a negative divergence, suggesting a weak move.
Technical analysis
In finance, technical analysis is security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis incorporate technical analysis, which being an aspect of active management stands...
indicator intended to relate price and volume in the stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
. VPT is based on a running cumulative volume that adds or subtracts a multiple of the percentage change in share price trend and current volume, depending upon their upward or downward movements.
Formula
The starting point for the VPT total, i.e. the zero point, is arbitrary. Only the shape of the resulting indicator is used, not the actual level of the total.
VPT is similar to on-balance volume (OBV), but where OBV takes volume just according to whether the close was higher or lower, VPT includes how much higher or lower it was.
VPT is interpreted in similar ways to OBV. Generally, the idea is that volume is higher on days with a price move in the dominant direction, for example in a strong uptrend more volume on up days than down days. So, when prices are going up, VPT should be going up too, and when prices make a new rally high, VPT should too. If VPT fails to go past its previous rally high then this is a negative divergence, suggesting a weak move.
Similar indicators
Other price × volume indicators:- Money Flow Index
- On-balance volume
- Accumulation/distribution indexAccumulation/distribution indexAccumulation/distribution index is a technical analysis indicator intended to relate price and volume in the stock market.-Formula:This ranges from -1 when the close is the low of the day, to +1 when it's the high. For instance if the close is 3/4 the way up the range then CLV is +0.5...