Price and Volume Trend (PVT), like On Balance Volume, represents the
growing sum of values of the trade volume calculated regarding the change of closing prices. In the case
of OBV, we add the current volume to the current value of the indicator if the prices close on a higher
level, and subtract the volume otherwise. In the case of PVT, only a part of the current volume is added
to the subtracted to be added to PVT, you must guide yourself by the difference between the current price
and the closing price of the previous bar.
Many investors think that PVT is more precise than OBV in showing the
dynamics of trade volume. It is so because we add one and the same volume
to the OBV value disregarding whether the closing price was just a little
bit higher or twice as high. In the case of PVT, we add a small part of the
volume to the current cumulate value if the relative change of price is not
big. If the price changed considerably, a large part of the volume is added
to the PVT value.
We get PVT by multiplying the current volume by the
relative change of the share price and adding the result to the current
cumulate value of the indicator.