Smart Money Interest: Comparing PVI and NVI with an RSI Ratio
Summary
This document explains an oscillator intended to compare institutional and retail activity using the Positive Volume Index (PVI) and Negative Volume Index (NVI). It describes the conventional interpretation behind the comparison: high-volume periods are associated with retail trading, while lower-volume periods are associated with institutional accumulation or distribution. The indicator applies RSI calculations to both volume indices, divides the smart-money RSI by the dumb-money RSI, sums the ratio over a configurable period, and normalizes it against its recent peak.
A rising line is presented as increasing smart-money influence relative to retail activity, while readings above a configurable threshold flag high relative interest. The text gives default settings for the summation, RSI, normalization, and threshold periods, and notes the responsiveness-versus-smoothness tradeoff when changing the summation period. These are interpretations based on conventional volume theory, not evidence that particular traders caused the observed activity. The document provides no performance tests, and the oscillator alone does not establish accumulation, predict a breakout, or account for market context.
Key ideas
- The indicator compares RSI readings derived from the Positive and Negative Volume Indices.
- It interprets high-volume activity as more retail-driven and lower-volume activity as more institutionally driven.
- A rising normalized ratio signals increasing relative smart-money interest under the indicator’s assumptions.
- A configurable threshold highlights elevated readings but does not independently confirm a future price move.
- Longer summation periods make the indicator smoother and slower, while shorter periods increase sensitivity.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.