What Are Volume Indicators & Which Is Better?
A quick guide to the main volume-based indicators traders use: OBV, VWAP and Volume Profile. Each works differently and is better suited for specific situations.
How does OBV (On-Balance Volume) work?
OBV calculates cumulative volume flow by adding volume on up-days and subtracting on down-days. An upward OBV trend suggests buying pressure; a declining OBV suggests selling pressure.
What is VWAP (Volume Weighted Average Price)?
VWAP gives the average price for a trading session weighted by volume. When price is above VWAP, it signals bullishness; below VWAP indicates bearishness. Widely used by intraday traders and institutions.
Volume Profile Indicator — what it shows
Volume Profile displays volume distribution across price levels. Peaks show high trading interest and often act as strong support or resistance zones.
Quick Reference
| Indicator | Primary Use | When to watch |
|---|---|---|
| OBV | Gauge cumulative buying/selling pressure | Confirming or diverging from price |
| VWAP | Intraday fair value reference | Intraday trends & institutional levels |
| Volume Profile | Volume concentration at price levels | Support/resistance & market structure |
Which Indicator Is Better?
No single indicator is “best” — it depends on your trading style:
- OBV works well for swing traders confirming medium-term trends.
- VWAP is ideal for intraday traders gauging fair value and institutional flow.
- Volume Profile helps positional traders identify strong support and resistance zones.
Many professionals combine these indicators rather than relying on just one.
Tags: #OBV #VWAP #VolumeProfile #TechnicalAnalysis #StockMarket
The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services
