History and Background

The Cumulative Volume Index was developed as a way to measure the cumulative net inflow or outflow of volume in a market. It was first applied to market breadth analysis in the stock market, mainly to track the movement of advancing versus declining issues.

The idea is simple: if a market closes higher, that day's volume is considered "up" volume and added to the CVI. If it closes lower, it's "down" volume and is subtracted. Over time, this running total paints a clearer picture of whether volume is supporting price direction, often revealing hidden accumulation or distribution before a significant move.

How the Indicator Works

At its core, the CVI operates on a simple premise:

• Up day (close > previous close): Add volume

• Down day (close < previous close): Subtract volume

• Unchanged day: No change

The result is a cumulative line that rises when volume supports upward price moves and falls when volume backs downtrends. Divergences between price and the CVI can offer early reversal signals.

Key Features

• Tracks cumulative volume flow to reveal market sentiment
• Histogram or line visualisation options
• Real-time updates as each new bar closes
• Clear divergences between price and volume trends
• Customizable visual styles and parameters
• Designed for all timeframes and asset classes
• Compatible with cTrader Desktop

How to Use it for Trading

• Confirm Trends: A rising CVI confirms strong bullish trends when paired with rising prices.

• Spot Divergences: If price makes new highs but CVI does not, it may signal weakening momentum.

• Volume Confirmation: Helps filter false breakouts by checking whether volume is supporting the move.

• Institutional Activity: Sudden surges in CVI often point to larger players entering or exiting positions.

Cumulative Volume Index Formula

CVI_t = CVI_t-1 + V_t × D

Where:

• V_t = Volume at time t
• D = Direction factor (+1 for up day, -1 for down day, 0 for no change)

While the CVI is a powerful tool for understanding volume trends, it can be less effective in sideways or low-volume markets. Without strong directional volume, it may flatten out, offering limited insight. Like all volume indicators, it should be used alongside price action or confirmation tools to avoid false signals.

How To Install & Remove

First, ensure that you have the cTrader trading platform installed. Then, unzip the file and double-click it to install the platform automatically.

• How to install
• How to open
• How to remove
• How to edit settings

Help Using This Indicator

If you need help using this indicator, try asking cTrader Sensei, our free AI assistant dedicated to the cTrader platform, rated 4.9 out of 5 in the ChatGPT Store. It can guide you through setup, usage, and troubleshooting with clear, step-by-step support.

• Chat with cTrader Sensei.

If you still need assistance, feel free to post your question on our product support forum, where our team and community can help.

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