How It Trades
- Keep a running total of volume: add the whole bar's volume when it closes up, subtract it when it closes down. That total is On-Balance Volume.
- Buy when OBV crosses above its own 20-bar average: buying volume is accumulating faster than it has been recently, which Granville argued tends to lead price.
- Sell when OBV falls back below that average. The comparison is against its own average rather than a fixed level because OBV's raw value depends entirely on where the count began.
Example Strategy
Pine Script
Paste it into TradingView’s Pine Editor to run these rules on any chart.
//@version=6
// OBV Trend — sort.finance. Fills at the signal bar's close, 0.02% fee a side,
// whole account per trade, as the backtest. History and indicator warm-up
// differ from the site's, so expect close to the same trades, not identical.
strategy("OBV Trend", overlay=false,
initial_capital=100, default_qty_type=strategy.percent_of_equity,
default_qty_value=100, commission_type=strategy.commission.percent,
commission_value=0.02, process_orders_on_close=true, pyramiding=0)
// The bar the current position opened on, and the bar the last one closed on.
var int entryBar = na
var int exitBar = -1
// ── Signals ──────────────────────────────────────────────────────────────
obv = ta.obv
average = ta.sma(obv, 20)
above = obv > average
enterNow = above and not above[1]
exitNow = not above and above[1]
// ── Orders ───────────────────────────────────────────────────────────────
// Open on the first bar the entry holds while flat; close on the first
// later bar the exit holds; never reopen on the bar a position closed.
inTrade = strategy.position_size != 0
if inTrade and bar_index > entryBar and exitNow
strategy.close("Long")
exitBar := bar_index
else if not inTrade and bar_index > exitBar and enterNow
strategy.entry("Long", strategy.long)
entryBar := bar_index
// ── Drawing ──────────────────────────────────────────────────────────────
plot(obv, "OBV", color=#4d8dff)
plot(average, "OBV SMA 20", color=#e0a03a)