Price Volume Trend: OBV Scaled by Percent Change

Key Takeaways

• PVT adds (volume times percent change in close) to the prior PVT each bar.
• Unlike OBV, which adds full bar volume on direction, PVT scales by how big the move is.
• The line is most useful for trend confirmation and for divergence at swing highs and lows.
• Treating PVT levels as comparable across stocks ignores that the running total depends on each stock's volume scale.

What It Is

The price volume trend PVT is a single-line cumulative indicator plotted below price. It moves on every bar, with the size of the change controlled by both volume and the percentage close change.

PVT is older than many modern volume oscillators and shows up in most charting platforms under names like Price Volume Trend, Volume Price Trend, or PVT. The version used today is consistent across StockCharts-style implementations.

The Intuition

OBV treats a 5 percent up day and a 0.1 percent up day the same way. PVT does not. A 5 percent move adds 5 percent of that bar's volume; a 0.1 percent move adds only 0.1 percent.

The logic is that volume should be discounted by how much price actually responded. Heavy volume that barely moves price reflects supply absorbing demand. PVT writes that situation into the math by adding only a tiny slice of the bar's volume.

How It Works

The formula is a single line with no smoothing:

PVT = Prior PVT + Volume * (Close - Prior Close) / Prior Close

The starting value is arbitrary and chosen by the platform. Like OBV, only the direction and slope of PVT carry information; absolute level is not comparable across symbols.

Three reading modes are common. First, slope: rising PVT with rising price supports the trend; falling PVT with rising price warns of weakening flow. Second, breakouts: PVT making a new high before price clears resistance often precedes the breakout. Third, divergence: lower PVT highs against higher price highs signal possible distribution.

Many traders overlay a moving average on PVT itself, often a 21 or 50 period exponential moving average, to filter out single-bar noise. Crossovers of PVT with that moving average then serve as confirmation triggers.

Worked Example

Assume PVT starts at zero. Track four bars:

• Bar 1, close 100, no prior, PVT = 0
• Bar 2, close 102, prior 100, volume 1.0M: percent change +2 percent, PVT update +20,000, PVT = +20,000
• Bar 3, close 101, prior 102, volume 1.5M: percent change about -0.98 percent, PVT update about -14,706, PVT = +5,294
• Bar 4, close 103, prior 101, volume 2.0M: percent change about +1.98 percent, PVT update about +39,604, PVT = +44,898

The line responds proportionally to the size of each move. Compare this to OBV, which would have added the entire bar's volume on Bar 2 and Bar 4 and subtracted all of Bar 3's volume. PVT compresses the influence of small price changes regardless of bar volume.

Common Mistakes

1. Comparing PVT across tickers. The starting value is arbitrary and the running total depends on share volume scale. Only relative motion within a single chart is meaningful.
2. Trading every PVT zero-line cross. The zero line on PVT is a starting-point artifact, not a meaningful threshold. Slope and divergence are the real signals.
3. Ignoring divergence. PVT shares OBV's strongest documented use: lower highs against rising price often warn of distribution. Skipping divergence checks wastes the line.
4. Treating PVT as smoothed. The raw line is bar-by-bar and noisy. Overlay an EMA on PVT itself before trading off crossover signals.
5. Reading PVT during illiquid sessions. On holidays, half-days, and sessions with stale auctions, the bar volume term can distort PVT in ways that do not reflect real flow.

Frequently Asked Questions

What is the price volume trend PVT in simple terms? The price volume trend PVT is a running total that grows or shrinks each bar by the bar's volume multiplied by the percentage change in close, blending size of move and flow into one line.

How does the price volume trend PVT affect investment decisions? Traders use rising PVT during a price uptrend as confirmation of flow supporting the trend. Bearish divergence between price highs and PVT highs warns of weakening demand.

What is a real-world example of the price volume trend PVT? On a daily large-cap chart, PVT typically tracks price closely during a steady rally. When the rally tops, PVT often peaks earlier than price, producing the bearish divergence Granville's followers look for.

How can investors use the price volume trend PVT effectively? Plot PVT below price, overlay a moving average on it, and focus on slope plus divergence at swing extremes. Treat absolute levels as platform artifacts.

How is the price volume trend PVT different from On Balance Volume? OBV adds the entire bar's volume on every up close and subtracts it on every down close. PVT adds only the fraction of volume that matches the percentage move, so it reacts to size, not just direction.

Sources

1. TradingView Solutions, Price Volume Trend (PVT). https://www.tradingview.com/support/solutions/43000502345-price-volume-trend-pvt/
2. Trading Technologies, Price Volume Trend (PVT). https://library.tradingtechnologies.com/trade/chrt-ti-price-volume-trend.html
3. Incredible Charts, Price and Volume Trend. https://www.incrediblecharts.com/indicators/price_and_volume_trend.php
4. Commodity.com, Price Volume Trend. https://commodity.com/technical-analysis/price-volume-trend/

Disclaimer

This article is educational content only and is not financial advice. Nothing here is a recommendation to buy, sell, or hold any security. Consult a licensed advisor before making investment decisions.