What it is
The PVO tracks participation, not direction. It tells you whether more or fewer trades are going through than normal, so it answers the question every breakout trader asks: is anyone actually behind this move?
Because it is a percentage, readings can be compared across markets and across years. A PVO of +20 on gold means the same as +20 on US30: short-term volume is running 20% above its longer average. On gold and index CFDs the volume is tick volume (the number of price updates), which tracks real activity closely enough for this job.
How it is calculated
1. Take the volume of each candle. 2. Work out a 12 period exponential moving average (EMA, an average that gives more weight to recent candles) of volume. 3. Work out a 26 period EMA of volume. 4. Subtract the 26 EMA from the 12 EMA, divide by the 26 EMA and multiply by 100. 5. Many traders add a 9 period EMA of the PVO as a signal line and a histogram of the gap between them, exactly as with MACD.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Fast | 12 | 1 to 200 | How many candles the short volume average covers. Lower reacts faster to a sudden burst of activity but gives more false spikes. |
| Slow | 26 | 2 to 400 | How many candles the long volume average covers. This is the 'normal' level of volume that the fast average is compared against. Keep it well above the fast setting. |
How to read it
How to trade it
- 1
Mark a clear range or level first, for example the Asian session high on gold.
- 2
Wait for a candle to close beyond the level. Check the PVO on that candle: you want it above 0 and rising, ideally above about +10.
- 3
Enter on the close of the breakout candle, or on the first small pullback towards the broken level.
- 4
Place the stop back inside the range, for example 6 to 8 points below the broken high on gold, or 40 to 60 points on US30.
- 5
Target at least 2 times the stop, or the next key level such as the previous day high, and take part profits if PVO spikes far above normal and starts falling.
The idea is cancelled if price closes back inside the range, or if PVO drops back below 0 within a few candles of the breakout, showing the volume never really arrived.
WickSpeak plots the PVO in its own pane and writes a plain-English reading on the live candle: what the PVO is, whether activity is building or fading right now, how to use that on the current move and what would prove the reading wrong. In Playbook, a condition can check when the PVO crosses above or below a level you set, is above or below a level you set, is above or below its own average, or is rising or falling, which makes it easy to add a 'volume must be above normal' filter to a breakout play and backtest the difference.
Best markets and timeframes
Most useful on 5 minute to 1 hour charts of gold, US30 and NAS100, where session opens bring clear bursts of activity. It works on forex too, but tick volume there is quieter outside the London and New York sessions.
Common mistakes
- Reading PVO as a buy or sell signal. It measures activity, not direction, so it must be paired with a price trigger.
- Comparing it to the session before without context. Volume is always lower in the Asian session, so PVO below 0 overnight is normal.
- Chasing a huge PVO spike late in a trend, when it often marks a climax rather than a fresh start.
Works well with
Questions traders ask
What is the difference between PVO and MACD?
They use the same maths. MACD compares a fast and slow average of price, while PVO compares a fast and slow average of volume and shows the gap as a percentage. So MACD tells you about direction and PVO tells you about activity.
What are the best PVO settings?
The standard settings are 12 and 26, often with a 9 period signal line. For faster intraday charts some traders use 5 and 20 to catch session-open surges sooner. Whatever you pick, test it on your own market before relying on it.
Does PVO work on forex and gold?
Yes, but brokers report tick volume for spot forex and gold CFDs, which counts price updates rather than contracts. Tick volume rises and falls with real activity, so PVO still shows when a market is busier or quieter than normal.
What does a negative PVO mean?
A negative PVO means recent volume is below its longer-term average. It does not mean price is falling. It means fewer participants are trading, so breakouts at that moment have less behind them.