When low price moves follows low volume, this indicator forms. Traders assume that this puts a market at risk for a trend reversal. It should also match the magnitude of the move to a great extent. The general rule of the VPT is that the indicator has to move in the same direction as price. Some general rules traders should know about the VPT With VPT, the indicator moves according to the size of a shift in price. It doesn’t include the extent of the move into its calculation. With on-balance volume, the indicator rises or declines according to whether the price made a new high or low. This indicator is conceptually similar to On Balance Volume (OBV). If the price rises, the value of the indicator goes higher. If the price goes down, the value of the indicator also goes lower because of the negative value. It does this in the price over a particular interval. The basic idea behind the indicator is to multiply the volume of the market by the percentage change. It joins price and volume in the market to make a hybrid trading indicator of the two variables. What is the Volume Price Trend indicator (VPT)? VPT is an interesting volume indicatorĮxperts define the volume price trend (VPT) as a price-volume trend at times. Rather than adding or subtracting volume based on the state of the current stock price compared to the price the initial day. It is different from other price- volume indicators because it uses the percentage of price change as a factor of formulation. VPT also uses them to show momentum divergence as a warning sign of a potential market reversal. It uses them to confirm the strength of the trend in price. The VPT indicator makes use of both percentage changes in price and volume. Also, the volume shows the strength of the buying or selling momentum. The percentage of change in the share price of a trend shows the relative supply or demand of a stock. It is a technical momentum indicator used by traders to detect the parity between the supply/demand of a stock. In this article, we’ll go into details about the Volume Price Trend indicator. It also shares price following their upward or downward movement. The volume price indicator adds or subtracts multiples of a percentage change in recent stock volume.
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