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Negative Volume Index (NVI)

Negative Volume Index (NVI)

What Is the Negative Volume Index (NVI)?

The negative volume index (NVI) is a technical indication line that incorporates volume and price to graphically show what price developments are meant for by down volume days.

Understanding Negative Volume Index (NVI)

The negative volume index (NVI) can be utilized with the positive volume index (PVI). The two indexes were first developed by Paul Dysart during the 1930s and acquired prevalence during the 1970s in the wake of being highlighted in Norman Fosback's book named "Securities exchange Logic."

The positive and negative volume indexes are trendlines that can assist an investor with following how a security's price is changing with the effects of volume. PVI and NVI trendlines are regularly accessible through advanced technical charting software programs like MetaStock and EquityFeedWorkstation. Trendlines are generally added below a candlestick pattern like the perception of volume bar charts.

Negative volume index trendlines might possibly be the best trendlines for following mainstream, smart money developments commonly described by institutional investors. Positive volume index trendlines are normally more extensively associated with high volume market trending effects, which are known to be all the more intensely affected by both smart money and noise traders.

NVI can be valuable after a price descends from high-volume trading. Low volume days can show how institutional money and mainstream investors are trading a security. Generally, it is best to follow both the NVI and PVI together, as overall they address how price is being affected by volume.

Negative Volume Index (NVI) Calculations

NVI will possibly change when the volume has diminished over time. Subsequently, assuming that the current volume is higher, there is no change. On the off chance that the volume is lower than the previous day, NVI is calculated utilizing the following equation:

Highlights

  • The negative volume index trendlines might possibly be the best trendlines for following mainstream, smart money developments regularly described by institutional investors.
  • NVI can be utilized related to the positive volume index (PVI) to perceive how price is being affected by volume.
  • The negative volume index incorporates volume and price to graphically show what price developments are meant for by down volume days.