ChartingTechnical IndicatorOscillatorsTrade Volume Index

Trade Volume Index (TVI)

The Trade Volume Index (TVI) is a volume-based indicator that provides insights into the strength of buying and selling pressure in the market. It analyzes the relationship between price movements and trading volume, helping traders assess market trends and potential reversals.

Overview of the Trade Volume Index

  • Purpose: The TVI aims to highlight changes in volume associated with price changes, enabling traders to understand whether price movements are supported by strong or weak volume.
  • Market Analysis: By focusing on volume dynamics, the TVI helps traders identify potential bullish or bearish trends, making it a valuable tool for decision-making.

Key Features of the Trade Volume Index

  1. Volume Analysis:
    • The TVI emphasizes the importance of volume in confirming price trends. An increase in volume can signify the strength of a price movement, while a decrease may suggest weakness.
  2. Indicator Scale:
    • The TVI is typically plotted on a scale with no fixed range, allowing it to reflect changes in volume dynamics over time.
  3. Trend Confirmation:
    • A rising TVI indicates increasing buying pressure, suggesting a bullish trend. Conversely, a declining TVI indicates selling pressure, signaling a bearish trend.

How to Use the Trade Volume Index

  1. Access the Indicators Section

    • Click on the “Indicators” or “Studies” menu located at the top of the chart.
    • Expand the list of available indicators and technical studies.

  2. Find and Add the Trade Volume Index

    • Search for TVI: Enter “Trade Volume Index” or “TVI” in the search bar of the indicators list.
    • Add the Indicator: Click on the Trade Volume Index to add it to your chart. It will appear as a line graph in a separate panel below the main price chart.

  3. Customize the Trade Volume Index Indicator

    • Settings: Access the settings by right-clicking on the TVI line or clicking on the settings icon.
    • Adjust any parameters if available, such as the period or smoothing options, to suit your trading strategy.
    • Modify the line color, style, and thickness according to your preferences.

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  4. Interpret the Trade Volume Index Signals

    • Rising TVI: A rising TVI suggests increasing buying pressure and confirms a bullish trend. Traders may consider this as a signal to enter long positions.
    • Declining TVI: A declining TVI indicates selling pressure and confirms a bearish trend. Traders may consider this as a signal to enter short positions or close long positions.
    • Volume Divergence: Watch for divergences between the TVI and price action. For example, if prices are rising but the TVI is falling, it may signal a weakening trend.

  5. Make Trading Decisions Using the Trade Volume Index

    • Trend Confirmation: Use the TVI to confirm the strength of a trend. In a strong uptrend, the TVI should also be rising, while in a downtrend, the TVI should be falling.
    • Identify Potential Reversals: Sudden changes in the TVI can signal potential trend reversals. For instance, if the TVI suddenly drops in a bullish trend, it may indicate a shift in market sentiment.
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