Cumulative Volume Indicator
Cumulative Volume is a technical indicator that indicates volume
Description
One of the indicators that are often used by forex traders is the cumulative volume indicator (CVI). This technical indicator measures the total volume of a security over a specified period of time.
It can be used to generate buy and sell signals, as well as to confirm other trading signals. While the CVI is not perfect, it can be a useful tool for forex traders who are looking for an edge in the market.
The cumulative volume indicator is calculated by taking the sum of all past trading volumes and dividing it by the total number of trades made. The resulting number is then plotted on a chart, with higher values indicating a stronger trend. When the indicator reaches a certain level, it can be used as a signal to enter or exit a trade.
Cumulative Volume indicator BUY / SELL Signals
The indicator is calculated by cumulatively adding the volume of each period and then dividing by the total number of periods.
- If the indicator is above 0, it is considered a buy signal
- If the indicator is below 0, it is considered a sell signal.
One of the advantages of using the cumulative volume indicator is that it can help to filter out false signals. For example, if there is a sharp increase in volume followed by a period of low volume, this could be a sign that the market is about to turn.
However, if the volume continues to rise after the initial increase, this could be a sign that the market is still trending upwards. As with any technical indicator, it is important to use other indicators in conjunction with the cumulative volume indicator to confirm potential signals.
Conclusion
The Cumulative Volume indicator (CVI) is a popular technical analysis tool used by traders to measure the total volume of an asset over a specified period of time. This can be helpful in determining when there is a strong interest in a security and, as such, may be indicative of a price increase or decrease. The CVI can be used on all time frames but is most commonly applied to intraday charts.
You can easily download the CVI for mt4 for free from our website.