Everyone around the world has fallen for a trend here or there. Some more than others, while others take a while to get coerced. Despite all that, it is still important to understand the significance of these trends. And how trends affect us in our daily lives. Whether it is to watch a movie starring a popular celebrity, trying a new restaurant, or even in the market trading business, trends affect everything. And you can see the proof of impact by looking at the market’s Trade Volume Index.
But what is the trade volume index? Is it important to learn about it? How can you utilize this to your advantage? Well, all of that will be answered in this article. So without further ado, this is the essential trade volume index (TVI) guide.
What is the Trade Volume Index (TVI)
The Trade Volume Index, better known as TVI, is an indicator used in trading to signify the volume of trends and stocks. It does so specifically by measuring the direction of stock price trends and change in volume. It is normally used for intraday trading.
There are numerous types of on-balance volume indicators. However, TVI is great for checking the market to see price volumes. It can be used to check if the stock is getting a resurgence as of late or it is new. From then on, you can check the price history and highs and lows of the price to calculate the opportune time to buy or sell.
Using the Trade Volume Index (TVI)
TVI indicators are used as a form of aid for the trading signals while it is scouring the price chart. If the volume is supporting the price change then the TVI will discern it. And trades then get the options to either wait for the price point to drop or sell stocks they have at the high price volume.
The Trade Volume Index has a strict regulation on the volume of the stock. However, it can also classify any high price movement as part of its volume equation. If the price calculated is greater than the MTV then it shall add volume due to accumulation. Although, if the price actually decreases then the MTV will then have to decrease the volume by subtracting.
How to Calculate the TVI
The TVI is an indicator generated by technical charting software. It’s programmed to calculate the industry with different types of programming that help discern the volume of the stock. The easiest way to calculate all these numbers is by using tick value at the day trading price intervals.
The TVI is composed of different components that need to be summed up in order to get the full amount. First off is the minimum tick value, otherwise known as MTV, which is normally set at 0.5. And then you subtract the calculated price with the last day traded price.
When you have those components then it should look like this:
-Price > MTV = TVI = Volume + Last TVI (Accumulation)
-Price < MTV = TVI = Volume – Last TVI (Distribution)
-Price = MTV = TVI (Unchanged, Constant Price)