What it measures

On-balance volume is a cumulative count: each bar's whole volume is added if the close rose and subtracted if it fell. Joseph Granville's idea was that volume precedes price, so an OBV making new highs before price does means accumulation. The level of the line means nothing; only its shape and direction do.

The calculation

OBV today = OBV yesterday + volume (close up), − volume (close down), unchanged (close flat)

The starting value is arbitrary, so two charts can show the same OBV at different levels; the slope and the swing points are what carry information.

Inputs and defaults

None in the indicator itself; strategies add a moving average of OBV and trade the cross, or compare OBV's swings with price's.

How it is read

OBV rising with price confirms the move; OBV flat or falling while price rises is a divergence read as weak demand. A breakout in OBV before a breakout in price is the classic accumulation signal.

Where it fails

A single heavy bar moves the line permanently; a close one tick higher assigns the entire bar's volume to the buyers. On crypto the volume field depends on the exchange and can include wash trading, and OBV sums every error. Divergence readings are discretionary and most coded versions reduce to "OBV above its average", which is a momentum rule in volume's clothing.

How the desk reads it

OBV appears in a small number of the screened strategies, almost always as a confirmation filter rather than the signal. The desk reads it as a filter and asks how many trades it removed and whether those were the losing ones.

In the desk's screen

Of the 614 screened strategies in the library, 7 (1.1%) use this indicator somewhere in their logic.

1 of those were gross-profitable on enough cells to reach the after-fee replay.

The count is read from the compiled code of each strategy in the library; a strategy that computes the indicator by hand under another name is not counted. The desk's own rules are not part of the count.