How does the Positive Volume Index (PVI) formula work?

External question — Personal Finance Stack Exchange Author: Ricardo Albear Original post: https://money.stackexchange.com/questions/117164 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I'm completely new to calculation of trading indicators and I can't understand this PVI formula: PVI = {yesterday’s PVI X [(today’s CP – yesterday’s CP) ÷ yesterday’s CP]} + yesterday’s PVI If I need to calculate Yesterdays PVI as a parameter of the operation, will I be in a infinite loop? What am I missing? I got the formula from here .

External answer — Personal Finance Stack Exchange Author: nanoman Original post: https://money.stackexchange.com/a/117168 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. The linked page is a poor explanation. It doesn't even say how volume enters the indicator! Also it has a bizarre unsupported statement that "Using the Positive Volume Index is a profitable trading strategy." A better explanation includes the following notes: If volume today is less than or equal to volume yesterday: PVI = Previous PVI If there is no previous PVI calculation then use the price calculation from today as the previous PVI as well

External answer — Personal Finance Stack Exchange Author: Bob Baerker Original post: https://money.stackexchange.com/a/117169 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. The formula is correct. You can't understand that formula because that web site's explanation is worthless. At first glance, you're always going to get a value of zero for the new calculation because you're calculating today's value based on multiplying by yesterday's value which on the first day is zero. What they fail to tell you is that: If there is no previous PVI calculation then use the price calculation from today as the previous PVI as well. What they also fail to mention is are the other rules for calculating the index: If volume today is greater than volume yesterday, then use the PVI formula. If volume today is not greater than volume yesterday, then the PVI stays the same for that day.