Volume and OBV, Drawn Out
Volume is the only value in this Academy that doesn't come out of price. Every other indicator is highs, lows and closes rearranged; volume is a separate input.
That's why it's used to confirm signals rather than generate them. It's the only data that can answer one specific question: did anyone actually participate in this move?
1. Volume is compared against itself
The absolute number tells you nothing. Knowing 2,000 BTC traded in a bar doesn't say whether that's a lot. So the volume filter always compares volume to its own moving average.
The rule is one line: allow a buy if this bar's volume exceeds N times the 20-bar average. Move the multiplier below and watch how fast the number of qualifying bars falls.
The dashed line is the 20-bar volume average multiplied by 1.5×. 31 of the 181 bars that have an average clear it — 17.1%. Those bars are marked on the price line above.
- Price (close)
- Volume
- 20-bar average × the multiplier
BTC/USDT · 4h · Binance · 2026-08-03 → 2026-09-05
Across the 181 bars here that have an average, 31 clear 1.5× (17.1%), 16 clear 2.0× (8.8%), and only 3 clear 3.0× (1.7%). The biggest is 08/19 12:00 UTC at 5.88× the average, on a candle that itself closed +6.26% — the bar right after the 08/16 squeeze the Bollinger lesson annotates resolves.
2. The lookback loosens the gate, it doesn't sharpen it
The volume filter has a second setting: a lookback. At 0 it checks the signal bar alone. At N it passes if any of the last N+1 bars cleared the multiplier.
It exists because in practice participation often arrives a bar or two before price confirms. The spike happens first, then price follows.
At a fixed 2.0× multiplier, a lookback of 0 means the filter passes if any of the last 1 bars cleared it. 16 bars pass.
- Price (close)
- Filter passes
BTC/USDT · 4h · Binance · 2026-08-03 → 2026-09-05
Don't mistake which direction this moves. Hold the multiplier at 2.0× and raise only the lookback, and qualifying bars go from 16 to 41 (lookback 2) to 71 (lookback 5). The condition isn't getting more precise — it's getting weaker.
When you sweep, vary the lookback and the multiplier together. Widening the window at an unchanged multiplier leaves you with a filter that is switched on but no longer filtering much.
3. OBV is one running total
On-Balance Volume is probably the simplest calculation in this Academy. If a bar closed up, its entire volume is added to a running total; if it closed down, subtracted; if unchanged, nothing happens.
There's no halving, no proportioning, no scaling by how far it moved. All of it, or none of it.
No averaging, no period. If the bar closed up, its entire volume is added; if it closed down, subtracted; if unchanged, nothing happens. That is the whole indicator.
- Price (close)
- OBV
- Volume added or subtracted (own scale)
BTC/USDT · 4h · Binance · 2026-08-03 → 2026-09-05
OBV's absolute number means nothing at all. It depends entirely on where your data happens to start — the first bar is simply defined as zero.
Only two things carry meaning: which way it's going, and where it sits relative to its own average. Comparing an OBV value from one data pull against another's is meaningless.
4. When price rises and OBV doesn't
The filter's real rule is to buy only while OBV is above its own moving average — true on 56.9% of the 181 bars here that have one.
The more interesting case is when the two disagree. Across these 200 bars price rose 27.1% and OBV rose with it, from 0 to 88,342 — real volume behind the move. But in the stretch after the big move, price edges higher while OBV drains noticeably — the window shaded below.
The filter's real rule: buy only while OBV sits above its own 20-bar average — true on 56.9% of the 181 bars that have one.
- Price (close)
- OBV
- OBV's own 20-bar average
BTC/USDT · 4h · Binance · 2026-08-03 → 2026-09-05
That's divergence: the last leg up didn't carry the volume the earlier ones did. Divergence doesn't guarantee a reversal, but it's information you cannot get from the price line alone.
5. In the Simulator
Both filters restrict buys only; neither touches sells or exits. That's deliberate — blocking an exit because volume dried up would trap you in exactly the situation you'd want out of.
- Volume filter — an optional block that allows a buy only when volume clears a chosen multiple of its average.
- OBV volume-trend filter — an optional block that allows a buy only while OBV is above its own moving average.