! Monitoring the Smart Money by Using On-Balance Volume
Wayne A. Thorp, CFA is a vice president and the senior financial analyst at AAII. Follow him on Twitter at @WayneTAAII.


Mark from ON posted over 4 years ago:

With so much off-exchange volume ie dark pools etc. How relevant is ANY volume-based metric anymore when you are failing to capture as much as 80% of volume?

Howard from NC posted over 4 years ago:

IMO, I find two problems with this approach: 1) the reversal of a trend is not known except in retrospective, that is, you don't know when a trend is really changing until after-the-fact, and, 2) when volume increases there is no way of knowing whether the shares are moving from "smart" to "dumb" hands, just that there is increased trading activity. The volume increase on an "up day" may only reflect the increased activity of day traders or momentum investors, jumping in when volume is increasing with price increases. It's as reasonable to say that smart money is unloading as it is to say that they are accumulating, or that large institutional or investment funds are pumping and dumping. And, I agree with Mark's comment above and question the usefulness of these "indicators".

John from IL posted over 4 years ago:

Do most technical indicators really confirm the past rather than acting as a useful guide to the future?

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