Negative Volume Index - NVI
Definition of 'Negative Volume Index - NVI'
A measurement of the percentage change in a stock's price on days when trading volume declines. The negative volume index (NVI) attempts to determine what smart investors are doing. It is based on the idea that unsophisticated investors buy and sell primarily on high-volume days, while shrewd investors are more likely to trade on low-volume days.
Investopedia explains 'Negative Volume Index - NVI'
Often when volume drops, price drops. If a stock's price increases despite a decrease in volume, technical analysts consider this a positive sign. They use the negative volume index to help identify bull and bear markets.
Volume is a simple but valuable tool for traders to identify market interest, trends and potential price changes. Other volume-evaluation tools available to technical analysts include the positive volume index, on-balance volume, Chaikin money flow and the Klinger volume oscillator.