Volume Price Trend (VPT): Indicator Documentation
Syntax
DataSeries VPT( Bars );
Parameter Description
| Bars |
Bars object to be used in the indicator's calculation |
Description
The Price/Volume Trend Index ( PVT ) is a cumulative momentum style indicator which which ties together Volume with price action. The difference is that the amount of Volume added to the total is dependent upon the relationship of Today's close to Yesterdays close.
According to
IncredibleCharts, the formula is:
[((Today's Close - Yesterdays Close) / Yesterdays Close) x Volume] + Yesterdays PVT
The PVT can be considered to be more accurate than the OBV index in that the amount of volume apportioned each day is directly proportional to the underlying price action. So then, Large Moves account for large moves in the Index and small moves will account for small moves in the Index. This way the PVT can be seen to almost mirror the underlying market action, however as shown above, divergence can occur, and it is this divergence that is an indicator of possible future price action.
Example
This example illustrates how to plot the VPT:
using System;
using System.Collections.Generic;
using System.Text;
using System.Drawing;
using WealthLab;
using WealthLab.Indicators;
using Community.Indicators;
namespace WealthLab.Strategies
{
public class MyStrategy : WealthScript
{
protected override void Execute()
{
ChartPane vptPane = CreatePane( 20, false, true );
VPT vpt = VPT.Series( Bars );
PlotSeries( vptPane, vpt, Color.Blue, WealthLab.LineStyle.Solid, 2 );
}
}
}