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Forex Glossary

The Industry's Most Important Terms Explained

The forex industry is made up of countless definitions and it's easy to forget a few along the way. But because no forex education can be complete without a glossary of forex terms, we've compiled one which aims at explaining key definitions in the simplest way possible. This way, you'll never be lost or confused again!


On Balance Volume

It is a Volume Indicator developed by Joseph Granville.  Each day’s volume is assigned a plus or a minus sign, depending on whether the current day’s closing price is higher or lower than the previous day’s closing price.  The result is added to a running cumulative total.

If Closing Price current > Closing Price previous then add Volume

If Closing Price current < Closing Price previous then subtract Volume

If Closing Price current = Closing Price previous then no change

The On Balance Volume should be in the same direction as the prevailing trend.  Divergence is a signal that the prevailing trend is weakening and an impending reversal may be imminent.

Category: Technical Indicators

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