Cumulative Volume Delta
Cumulative Volume Delta represents the aggregated Volume Delta over a defined time period. While standard Delta measures the difference between market buys and sells for each candle or bar individually, Cumulative Delta provides a whole picture on the ongoing balance and dynamics of market buys and sells from a particular starting point in time. It offers a cumulative depiction of buying and selling pressure in the market throughout the specified timeframe.
Cumulative Delta can be positive or negative.
A positive CVD is shown in green, indicating a trading session with more aggressive buying behavior and a positive order flow.
On the other hand, a negative CVD is displayed in red, representing a trading session with more aggressive selling behavior and a negative order flow. The color-coded display helps to easily identify the dominant behavior of buyers or sellers during the session.
Traders can use this information to compare the Delta forces at specific price points. For instance, they can assess the strength of buying or selling intent at swing lows or swing highs, even if they are widely separated from each other. This allows traders to see the intensity of the market and its participants intentions.
CVD
More on the combination of Delta tools can be learned in our Academy.
Formula
CVD_n = CVD_{n-1} + Volume Delta_n
Where:
n - number of periods
CVD - Cumulative (Vol Delta)
Volume Delta_n = Difference between Bid Volume and Ask volume over specified interval
Bid Volume = - (Bid Volume )
Ask Volume = + (Ask Volume )
Buying Pressure = CVD > 0
Selling Pressure = CVD < 0
