The Cumulative Volume Delta (CVD) is an order flow-based indicator that helps forex traders measure buying and selling pressure by analyzing the difference between market buy and sell orders. In this guide, we’ll explore how CVD works, its advantages, and the best strategies to trade with it effectively.
The Cumulative Volume Delta (CVD) is an order flow indicator that tracks the net difference between aggressive buyers and sellers in the market. It helps traders identify buying or selling dominance by analyzing the volume of market orders hitting the bid (sell orders) and ask (buy orders).
The CVD formula is:
CVD = Previous CVD + (Buy Volume – Sell Volume)
Where:
CVD helps traders confirm the strength of an ongoing trend based on volume delta:
Divergence between price and CVD can signal potential trend reversals:
CVD helps validate breakouts and fakeouts:
Pairing CVD with a moving average (e.g., 50 EMA) improves trade accuracy:
✅ Pros:
❌ Cons:
The Cumulative Volume Delta (CVD) Indicator is a powerful order flow tool that helps traders analyze market sentiment, confirm trends, and detect reversals. When combined with moving averages or price action strategies, CVD enhances trade accuracy and decision-making.
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