Forex glossary
OBV (On-Balance Volume)
OBV adds bar volume when the close exceeds the prior close, subtracts it when lower and stays unchanged for equal closes. Its absolute level depends on the starting point. Retail spot FX often uses a provider's tick volume, which does not measure the market's total traded volume.
Illustrative example
How does it work in practice?
Assume OBV starts at 1,000. A higher close with volume of 200 makes it 1,200; a lower close with volume of 150 makes it 1,050. Tick-based input keeps the result in tick-volume units.
A case to work through
High volume without an OBV change
Hypothetically, OBV=500, previous and current close=25, and bar volume=900.
- The close is unchanged, so OBV stays at 500.
- Large volume does not receive a positive sign merely because it is large.
What follows? Record zero OBV change and identify the volume input separately.
Example boundary: Spot FX input may be one provider's ticks rather than total market turnover.
How does OBV assign a sign?
Text description of the diagram
- Close change: Compare the close with the previous close.
- Bar volume: Add, subtract or leave OBV unchanged for an equal close.
- Data coverage: Check contracts or ticks and the provider.
A useful distinction
OBV (On-Balance Volume) / Order flow
OBV signs an entire bar's volume by close change; order flow can classify aggressors for individual trades.
Check your understanding
Apply OBV's unchanged-close rule.
Show the answer and explanation
580
A lower close subtracts 120.
Market data and interpretation limits
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Related terms
Sources and documentation
- StockCharts – OBV
Volume addition/subtraction by close change and no change for equal closes.
Document read: - BIS – foreign-exchange market structure
Fragmented FX trading and limitations of an individual source's market coverage.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.