Time Segmented Volume (TSV): Definition, Calculation, and Applications

Time Segmented Volume (TSV) is a technical analysis indicator developed by Worden Brothers Inc. to analyze stock price and volume trends through specific time intervals. By dissecting market data into segments, TSV provides traders with a nuanced view of market dynamics, particularly in identifying periods of accumulation (buying) and distribution (selling). As a leading indicator, TSV’s movement is influenced by both price fluctuations and volume changes, making it a valuable tool for forecasting market trends.

TSV is calculated by comparing different time segments of price and volume, often depicted on a chart with a baseline at zero. When TSV crosses above the baseline, it indicates positive accumulation or buying pressure, suggesting a bullish trend. Conversely, crossing below the baseline signals distribution or selling pressure, often preceding a price decline. Identifying contradictions between price movements and TSV trends is crucial for traders. Positive or negative divergences between the two can signal potential price reversals, providing valuable insights for decision-making.

Traders can customize TSV with various moving averages, allowing for smoother analysis while considering trade-offs between sensitivity and lag time. Moreover, the ability to calculate moving averages of smoothed TSV adds versatility, similar to the MACD indicator. Positive and negative TSV crossovers serve as additional signals for traders, enriching their decision-making process and enhancing trading efficiency.

Consider a scenario where a technical trading firm engages in oil futures trading. With a predetermined profit target, the firm utilizes TSV to identify potential entry and exit points. When TSV surpasses the baseline, signaling oversold conditions, the firm triggers a purchase order. Subsequently, the position is closed upon reaching the profit target or when TSV indicates overbought conditions, facilitating strategic decision-making and enhancing trading efficiency.

While TSV shares similarities with on-balance volume (OBV) in measuring money flow, it distinguishes itself by segmenting price and volume data into specific time intervals. This granularity provides traders with a more detailed view of market dynamics.

Yes, TSV can complement other technical indicators such as moving averages, MACD, and RSI. Integrating TSV with these tools can enhance overall market analysis and improve decision-making accuracy.

While TSV can be valuable for various trading strategies, its effectiveness may vary depending on market conditions and individual trading styles. Traders should conduct thorough testing and analysis to determine its suitability for their specific approach.