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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:

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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

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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.

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