Stock Market Tools (12) – A Better OBV and Time Segmented Money Flow
By KH Tang's Blog  •  February 4, 2014
Part 1: A Better OBV

In the classical OBV (On-Balance Volume) indicator, it simply takes the idea from traditional tape reading - treat the "up tick" as Buy, "down tick" as Sell, and it assumes no change in price as neutral* (*which is not the case in tape reading).

When it comes to interpret the daily volume as such, errors will add up cumulatively.  For example, there are days when a Doji Star with high volume just merely one cent higher than yesterday price and the whole day volume would be taken as a BUY Volume....


Here is a gentlemen, William C. Garrett, attempted to break down the daily volume into two parts in his book - "Torque Analysis of Stock Market Cycle".   And, I think it makes sense.



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William showed his method in Fig. 4.3 in his book, and we can derive the formula from it as ...
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By KH Tang's Blog
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