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Lesson 17 of 21 · 4 min read

OBV: a piggy bank for volume

On-balance volume adds the volume of up days and subtracts the volume of down days. How it is computed step by step, why the number itself means nothing and what it reveals when OBV does not follow the price.

On this page

In this lesson

  • compute OBV candle by candle
  • understand why only the line's direction matters, not its value
  • see on a real chart what it means when the price rises and OBV does not

The OBV is the simplest indicator in the whole menu. It is a piggy bank: when a candle closes higher than the one before, it drops its whole volume in. When it closes lower, it takes its whole volume out. No periods, no averages. Professor Wick likes it for exactly that – there is nothing to get tangled in.

+++−rise = +fall = −Add, subtract.
OBV is a piggy bank: it adds the volume of up days and subtracts the volume of down days.

How it is computed#

  1. Start at zero (or at any number – you will see why).
  2. Did the candle close higher than the previous one? Add its volume.
  3. Did it close lower? Subtract its volume.
  4. Did it close at the same price? Nothing changes.

The candle's whole volume goes one way, even if the price rose by a single dollar. Click Next:

OBV in the panel below the chart: a running total of volume.

Nov 2, 2024: the candle closed lower (69,374.74 vs 69,496.01), so its volume is subtracted: 775,943 − 10,522 = 765,421.

Data: Binance Vision · CC BY-NC-SA 4.0

The number means nothing, the direction does#

OBV in our chart starts at zero on 1 October 2023, because that is where the data starts. Had it started a year earlier, the whole line would be shifted up or down. That is why the OBV value on its own is useless – "OBV is 1.2 million" says nothing. What matters is where the line is heading and whether it goes with the price.

  • Volume (panel below the chart)
  • OBV – cumulative volume (panel below the chart)
In December 2024 the price is far above the March high, OBV below it. The rise kept going on less “added” volume.
  • 13 Mar: Mar 13, 2024
  • 17 Dec: Dec 17, 2024
BTC/USDT · 1D · Data: Binance Vision · CC BY-NC-SA 4.0

When OBV does not follow the price#

Compare two dates from the chart:

DayCloseOBV
13 Mar 202473,0721,518,339
17 Dec 2024106,1341,222,270

The price is 45% higher in December, OBV is lower. Such a mismatch is called a divergence. It means the new price highs did not come with as much "added" volume as before. It is a warning that the rise has weaker support – not an order to sell. After 17 December 2024 the price fell to 93,000 by the end of the year, but the same mismatch could just as well have lasted for months. More on divergences in the last module.

OBV on Binance#

In Original mode: the indicator icon, the Sub Indicator tab, tick OBV and Save. OBV has no period – the legend shows just "OBV".

Video (21 s): OBV ticked in the Sub Indicator tab, a new panel below the chart (Binance, 9 Oct 2026).

One big candle can flip OBV

OBV adds or subtracts a candle's whole volume based on a single comparison of closes. A day with huge volume and a change of a few dollars moves the line as much as a big move. Treat OBV as a rough outline, not a precise measurement.

Common myths#

  • "High OBV = a strong market." The value depends only on where the calculation started. The direction of the line is what counts.
  • "OBV shows who was buying." It shows the volume of candles that closed higher or lower – it does not see individual trades.
  • "An OBV divergence = a crash tomorrow." It is a warning about weakening support. It does not give the timing.

Summary

  • OBV adds the whole volume of a candle that closed higher and subtracts the volume of one that closed lower.
  • The absolute number means nothing – it depends on where the calculation started. Watch the direction.
  • Price up and OBV down (13 Mar vs. 17 Dec 2024) is a divergence: a warning, not a signal.
  • On Binance, OBV is in the Sub Indicator tab and has no period.