What is the Positive Volume Index Indicator for MT4?
The Positive Volume Index (PVI) indicator is a technical indicator used in forex trading that illustrates the relationship between overall market activity and price movement. The PVI indicator displays a positive value if the market is making new highs and a negative if the market is making new lows. This Indicator can help forex traders detect potential turning points in the market and profit from favorable trends or reversals.
How to use the Positive Volume Index Indicator for MT4?
The PVI indicator helps identify periods of high volatility and can be used to spot potential buying opportunities. However, it should not be used as a long-term trading strategy as it can lead to losses if not properly executed. In general, the PVI indicator is best used as an analytical tool to assist in trading decisions.
Positive Volume Index Indicator MT4 trading settings
1) The formula used to calculate the PVI takes into account the total volume of a given period and the current value of the currency pair. To sum it up, you will first need to determine how many contracts were traded during a given period. This can be done by using a chart or manually tracking trades in an exchange. Then, you will need to find out how much each contract was worth at that time. Finally, you can take the ratio of these two values to get your PVI.
– So if five contracts were traded during a given period, but each contract was worth $100, your PVI would be 0.05 (5/100).
2) Traders often use positive and negative volumes to determine if demand increases or decreases for a given currency pair. If more contracts are being traded than average but are worth less than usual, this could indicate reduced interest in the market and signal an upcoming sell-off. Conversely, when fewer contracts are being traded, worth more than usual, this could indicate increased demand and bean upcoming rally. – Using the PVI can help identify an increased or decreased demand for a currency pair.
3) The PVI is best used as an analytical tool to assist in trading decisions. When it is increased or decreased demand, it can be challenging to determine which direction the market will move. Using the PVI, you can help identify patterns and clues that may help you make better trading decisions.
Positive Volume Index Indicator Advantages
– Provides traders with valuable information about the strength or weakness of the demand for a particular currency.
– Can help identify changes in the sentiment toward a currency and indicate future price movements.
– Can be used as part of technical analysis when making trading decisions.
Positive Volume Index Indicator Disadvantages
1) The Positive Volume Index may not always be reliable because it relies on data from various exchanges and can therefore be subject to inaccuracies.
2) The Positive Volume Index does not consider the size of individual trades, which can make it difficult to interpret for specific currencies, such as Bitcoin, where businesses are often small in value.
3) The Positive Volume Index may not accurately assess a currency’s performance if there has been a significant shift in market sentiment. In this case, it could signal a price reversal but not necessarily reflect actual market conditions.
4) The Positive Volume Index does not consider non-trading activities such as short selling or hedging, which can impact prices and affect the reliability of this Indicator.
PVI Indicator installation on MT4
To install the Positive Volume Index (PVI) Indicator on the MT4 platform, follow these steps:
- Download the Positive Volume Index .mq4 file.
- Open the MT4 platform and click “File” in the top left corner.
- Select “Open Data Folder.”
- Go to the “MQL4” folder, then the “Indicators” folder.
- Copy the .mq4 file into the Indicators folder.
- Close the MT4 platform and restart it.
- Go to the “Navigator” window on the left side of the forum.
- Find the Positive Volume Index in the list of custom indicators and drag it to your cart.
- Adjust the Indicator’s settings as needed and apply them to your chart.
The Positive Volume Index indicates how intensely prices are moving and can help assess the relative performance of different currencies. However, it should not be considered 100% accurate due to inaccuracies inherent in data from various exchanges and its reliance on market sentiment. Additionally, short-selling or hedging activities can significantly impact PVI readings and should be considered when using this Indicator.