On-Balance Volume
A running total that adds a period's volume when the close rises and subtracts it when the close falls.
Formula
OBV = Previous OBV + Volume if Close > Previous Close; - Volume if Close < Previous Close; unchanged if equal
Unit
shares
In depth
OBV assigns an entire period's volume to one side based only on whether the close was up or down, which is a very crude attribution — a session that closed up by one paisa counts identically to one that closed up 8%. Its absolute level is meaningless, since it depends entirely on when the running total was started; only its direction and its relationship to price carry any content. Users look mainly for divergence between OBV and price. The measure is described here as an accumulation of volume, and no forecast is implied.
Worked example
OBV at 24,00,000. A session closing up on 3,00,000 shares takes it to 27,00,000; the next closing down on 5,00,000 takes it to 22,00,000. The starting figure was arbitrary, so only the change means anything.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “On-Balance Volume” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.