OBV Breakout Strategy Indicator
OBV Breakout Strategy is based on the popular stocks strategy, where stock investors use volumes to predict stocks price direction, based on the concept "Volumes always precede stocks price", in stocks market, there is no central clearing house where stocks trading volumes are aggregated, so in stocks traders use a stocks indicator that will estimate the volumes. This stocks indicator is known as OBV - On Balance Volume.
Volume Precedes Stocks Price
Volumes always precede stocks price, this makes volumes a leading stocks indicator. Knowing how to interpret this volumes indicator helps stocks traders make better decisions when it comes to predicting where the stocks market will be moving to next - volume indicators can be used by stock traders to come up with a stocks trading breakout trading strategy.
When volume rises this shows that money is starting to flow into a stocks. Because volumes will always precede the stocks price, the next thing is that the stocks price will then go up - Stocks Trading Breakout Strategy Stock Technical Indicator. When the OBV indicator is going up it shows there are more buyers than sellers.
When the stocks trading volume falls it shows that money is starting to flow out of stocks. Because volumes will precede the stocks price, the next thing is that stocks price will then go down. When the OBV stocks indicator is going down it shows more trading volume is selling than buying.
Subsequently, when a downward trend line of the OBV indicator is broken it shows that sellers are starting to take profit and close their sell orders.
Likewise, when the upward trend line of the OBV indicator is broken it shows that buyers are starting to close their buy stock trades and take their profits.
Because the On Balance Volume indicator will add direction to the stocks trading volume and form a general trend direction, a stocks trader can compare the two - the stocks price trend direction and the OBV indicator trend direction. The direction of these two should correspond and move in the same direction but when there is a disconnect between these two - the stocks price and the indicator trend direction - then a stocks trader should pay attention to know when to exit the stock trading market or when to open a new stocks trading order depending on the stocks trade signal.
On Balance Volume is a stocks trading leading indicator and a stocks trader using this indicator can avoid entering the stocks market when it is too late. OBV Indicator is also a good stocks indicator to show when to take a profit early enough before the stocks market trend reverses and takes away all your profit.
Example of this Strategy
OBV Breakout Strategy Indicator - OBV Stocks Trading Breakout Indicator - Stocks Trading Volume Breakout Strategy
