On Balance Volume (OBV) is a free Metatrader 4 Forex indicator that can be used for both trade entry and exit or as an additional bull/bear trend filter.
The indicator appears as an oscillator in a separate MT4 chart window.
The indicator works very well for scalping currency pairs during the London and New York trading sessions.
Buy & Sell Trade Example
- Open a buy trade as soon as the OBV turns back above the 0.00 level (bullish).
- Open a sell trade as soon as the OBV turns back below the 0.00 level (bearish).
- Reverse the open position whenever an opposite signal appears on the chart.
The indicator can be used as a standalone trading tool for both trade entry and exit.
The indicator works equally well on all currency pairs (majors, minors and exotic) and shows promising results if used correctly.
Free Download
Download the “OBV.mq4” indicator for MT4
Indicator Chart (EUR/USD H1)
The picture below shows the On Balance Volume mt4 indicator in action on the trading chart.
Trading Tips:
Feel free to use your own favorite trade entry, stop loss and take profit method to trade with the On Balance Volume Forex indicator.
As always, trade in agreement with the overall trend and practice on a demo account first until you fully understand this indicator.
Please note that even the best trading indicator cannot yield a 100% win rate over long periods.
Indicator Specifications & Inputs:
Trading Platform: Developed for Metatrader 4 (MT4)
Currency pairs: Works for any pair
Time frames: Works for any time frame
Trade Style: Works for scalping, day trading and swing trading
Input Parameters: Variable (inputs tab), color settings & style
Indicator type: Oscillator
Does the indicator repaint? No.
On Balance Volume + Reflex Scalper Forex MT4 Strategy
This MT4 strategy combines the On Balance Volume Forex Indicator and the Reflex Buy Sell Forex Scalper to create a short-term scalping system that focuses on momentum and volume confirmation.
The combination helps traders identify early trend changes and avoid false entries during low-volume sessions.
The On Balance Volume (OBV) indicator measures buying and selling pressure based on volume flow.
When the OBV line slides above 0, it suggests accumulation and buying pressure, while a move below 0 indicates selling pressure.
The Reflex Scalper displays a blue histogram for bullish trends and an orange histogram for bearish trends, making it visually clear when momentum changes direction.
This strategy is ideal for day traders and scalpers who prefer fast execution and small but consistent profits.
It works well on the M5 and M15 timeframes and is especially effective on volatile currency pairs such as EURUSD, GBPJPY, and XAUUSD.
Buy Entry Rules
- Wait for the On Balance Volume line to slide above the 0 level, confirming buying pressure.
- Check the Reflex Scalper histogram: a blue bar must appear, confirming an upward momentum shift.
- Enter a buy trade at the close of the confirmation candle.
- Place the stop loss 15 to 20 pips below the recent swing low.
- Set the take profit between 25 and 35 pips or exit when the Reflex Scalper changes from blue to orange.
Sell Entry Rules
- Wait for the On Balance Volume line to drop below the 0 level, showing selling dominance.
- Check the Reflex Scalper histogram: an orange bar must appear to confirm bearish momentum.
- Enter a sell trade at the close of the candle that confirms the move.
- Place the stop loss 15 to 20 pips above the recent swing high.
- Set the take profit between 25 and 35 pips or exit when the Reflex Scalper turns blue again.
Advantages
- Combines volume and momentum, improving accuracy in short-term trading.
- Simple visual setup suitable for both beginners and experienced scalpers.
- Works well on major forex pairs with strong liquidity.
- Provides early detection of trend reversals before the price fully reacts.
Drawbacks
- Performance can drop during low-volume sessions or sideways markets.
- Requires quick reaction and discipline for consistent scalping results.
- False signals can appear if major news events disrupt normal price behavior.
- Needs tight money management due to small pip targets.
Case Study 1: EURUSD M5 Chart
During the London open, the OBV line crossed above 0 while the Reflex Scalper showed a blue histogram.
A buy trade was opened at 1.0725.
Price moved steadily upward for the next 40 minutes, reaching 1.0760 before the histogram turned orange.
The position was closed with a gain of +35 pips.
The combination of volume strength and clear momentum made this setup reliable and low-risk.
Case Study 2: GBPJPY M15 Chart
In the Asian session, the OBV slid below 0 while the Reflex Scalper turned orange, signaling a short entry.
A sell trade was opened at 192.40 with a stop loss at 192.65.
The pair dropped rapidly to 191.85 before retracing.
The position was closed at +55 pips profit.
This case showed how the dual confirmation helped avoid premature exits and captured a clean move within one hour.
Strategy Tips
- Trade only during high-volume sessions like London and New York for stronger OBV confirmation.
- Avoid trading before major economic news releases.
- Use a trailing stop of 10 pips once the trade moves into profit to secure gains.
- Backtest the system on different pairs to find those with consistent OBV responses.
- For added precision, combine with support and resistance zones for entry confirmation.
The synergy between the On Balance Volume Indicator and the Reflex Buy Sell Scalper provides traders with a reliable method to capture short bursts of momentum backed by genuine market volume.
When used with discipline and proper risk management, this MT4 strategy can be a consistent performer for intraday traders.
