Here are the best volume indicators for informed and profitable trading:
- On-Balance Volume (OBV): OBV measures the relationship between price and volume dynamics. It calculates the volume as a positive value when the closing price is higher than the previous day's close, indicating buying pressure, or as a negative value when the closing price is lower, indicating selling pressure1.
- Chaikin Money Flow (CMF): CMF is a volume-based indicator that helps identify trends and reversals. It calculates the difference between the volume on bullish and bearish price movements, providing insights into market sentiment1.
- Volume Weighted Average Price (VWAP): VWAP is a measure of the cost of trading a portfolio over a specific period. It is calculated by dividing the total dollar volume by the average number of shares traded. VWAP helps traders assess their trading costs and efficiency1.
- Klinger Oscillator: The Klinger Oscillator is a volume indicator that helps identify overbought and oversold conditions in the market. It is calculated by taking the difference between two moving averages of volume, one short-term and one long-term, and then dividing that by the sum of the two moving averages1.
- Supertrend: Supertrend is a trend-following indicator that combines elements of volume and price analysis. It is designed to identify trends and provide signals for entering and exiting trades2.
These volume indicators can be used to determine price dynamics, confirm trends, and identify potential reversal points, which can lead to more informed and profitable trading decisions.