✔️ Information reviewed and updated in December 2023 by Eduardo López
A good investor knows that the time to buy is when volumes and markets are going down, not up. That is why the negative volume index is one of the most used indicators by investment and trading experts.
➡✨What is the negative volume index?
This technical indicator is responsible for relating the behavior of both volumes and prices. This in order to give us a clear glimpse of a potential price decline which coincides with the drop in transaction volumes.
In this way, we can make better financial decisions by seeing when price trends are going down and thus, being able to obtain better investment prices. We usually find this indicator on some platforms, since it is not as common as other indices, but if we do find it, it can be very useful.
➡✨ How is it calculated?
The calculation of this indicator is made from the use of different data, for example, prices of the day, price of the day before, volumes of the day before, among other data. Once we obtain this information, a mathematical calculation is made which helps to determine the NVI or negative volume index.