Entry Strategy using the OBV (onbalance volume)

First off, when you have a lower study and try to apply a moving average to it. That requires some custom code. You can’t simply overlay (drag the moving average study) onto any lower study and expect real results. If you do that, those points where the OBV crosses the moving average are completely bogus. Why? Because the moving average remains tied to the stock price and is NOT tied to the OBV study.

If you don’t believe me, mark the places where those crossovers appear with a drawing tool. Such as a vertical line. Then change the number of days displayed on the chart. All the crossover points will change.

Which leads to the next problem. The values plotted by the OBV study are going to change based on how many bars are viewable on your chart. Check it out for yourself. Set the chart to 1 year of daily bars and make note of the OBV values. Then change that chart to 2 years of daily bars. Everything changes.

So, you can’t do this. I mean you technically could draw up some code that made a moving average based on the OBV. Yes, you could do that. But those crossover points are not fixed in time and space. They will vary based on the number of viewable bars on the chart.

And to put the final nail in this coffin. Even after you draw up the code to do this. We find that the Study Alert and Conditional Order editor fail to recognize one of the core functions required to produce the OBV. The name of the function is “TotalSum()”. So we are busted on so many levels. By now your head should be spinning.

Go grab another cup of coffee and walk away from the computer for a bit.