What it is
Paul Dysart created the index in the 1930s and Norman Fosback later popularised it. Because NVI ignores every busier candle, it builds a separate price path made only of the quiet sessions. If that path is rising, price has tended to go up when the crowd was absent.
It has no settings to tune. It starts from a base value (commonly 1,000), so its absolute level means nothing; traders compare it with its own average.
How it is calculated
1. Start NVI at a base value, for example 1,000. 2. For each candle, compare its volume with the previous candle's volume. 3. If volume is lower: NVI = previous NVI x (1 + percentage change in close). 4. If volume is the same or higher: NVI stays unchanged. 5. Traders add a long moving average of NVI as a signal line.
How to read it
How to trade it
- 1
Use a daily chart of US30 or NAS100, where the idea of quiet and busy sessions makes most sense.
- 2
Treat NVI above its own average as a long-only filter for swing trades.
- 3
Enter on a separate price trigger, for example a daily close above the prior day's high after a pullback.
- 4
Stop below the pullback low, which on daily US30 may be several hundred points, so size small.
- 5
Exit or stop taking new longs once NVI closes below its own average.
The bullish view is cancelled once NVI closes below its own average, showing the quiet sessions have turned negative.
WickSpeak writes a plain-English reading of NVI on the live candle: what it is, whether quiet candles have been lifting or dropping price lately, how traders use that and what would prove it wrong. In Playbook, a condition can check when NVI crosses above or below its own average, is above or below its own average, or is rising or falling, which makes it usable as a slow background filter.
Best markets and timeframes
Designed for daily charts of stock indices with exchange volume. It can be applied to daily US30 and NAS100 CFDs using tick volume. On intraday charts the quiet versus busy split mostly reflects time of day, so the original idea weakens.
Common mistakes
- Using it on 1 to 5 minute charts, where volume falls simply because a session is winding down.
- Reading the absolute number. Only its position against its own average matters.
- Treating it as an entry signal. It is a slow regime filter.
Works well with
Questions traders ask
What does the Negative Volume Index show?
It shows how price has behaved on candles with lower volume than the one before. A rising NVI means price has tended to rise on quieter candles.
What moving average is used with NVI?
Traditionally a 255 period EMA on daily charts, about one trading year. Some traders use shorter averages for more signals.
What is the difference between NVI and PVI?
NVI only updates on candles where volume fell, following the quieter trade. PVI only updates where volume rose, following the busier crowd.
Does NVI work on forex?
It can be calculated with tick volume, but it was built for stock indices where volume is reported by an exchange. On forex treat it as a rough guide.