Price/Volume Stock Screener

What Is a Volume Price Screener?

The price volume action screener identifies stocks with increasing or decreasing price momentum and volume. It helps to determine the buying or selling pressure in the market and the overall trend of a particular stock. The screener can help investors identify potential trading opportunities and provide valuable insights into the stock's price movement. Using a stock volume screener, investors can spot potential buying or selling opportunities in the market.
The price volume action screener depends on the price volume trend, a technical analysis tool that measures the trend's strength based on price and volume data. The volume stock screener is a simple but powerful indicator to analyse the stock market.

How Do You Calculate The Price Volume Trend?

You can calculate the price volume trend (PVT) by multiplying the percentage change in price by the volume and adding the result to the previous day's PVT. The formula for calculating the PVT is as follows.

PVT = [((Current Close - Previous Close) / Previous Close) x Volume] + Previous PVT

Where:

Current Close - The closing price of the current trading day
Previous Close - The closing price of the previous trading day
Volume - The volume of shares traded on the current trading day
Previous PVT - The PVT of the previous trading day

Example:

"Suppose a stock closes at ₹200 today and ₹190 yesterday, with 1,000 shares traded. The PVT calculation would be:"
(200−190)/190×1,000+𝑃𝑟𝑒𝑣𝑖𝑜us PVT (200−190)/190×1,000+PreviousPVT.

The PVT is a cumulative indicator reflecting the market's buying and selling pressure. If the PVT increases, it indicates intense buying pressure in the market, and if the PVT decreases, it means intense selling pressure. A reliable stock volume screener is essential for analyzing market activity and price trends.

How to Interpret The Price Volume Trend?

Depending on the trader's preference and strategy, you can interpret the price volume trend in several ways. Here are a few ways to interpret the PVT.

1. Trend Confirmation: If the PVT increases with the price, it confirms the uptrend. Conversely, if the PVT decreases with the price, it confirms the downtrend.

2. Divergence: If the PVT increases, but the price decreases, it indicates a bullish divergence, suggesting the stock may be undervalued and be a good buying opportunity. Conversely, if the PVT decreases but the price increases. In that case, it indicates a bearish divergence, suggesting the overvalued stock.

3. Volume Analysis: If the PVT increases with the volume, it indicates intense buying pressure in the market, which could be an excellent opportunity to buy. Conversely, if the PVT decreases with the volume, it indicates intense selling pressure in the market, which could be an excellent opportunity to sell.

Many platforms offer a free stock volume screener to help traders filter stocks based on volume metrics. Such as 5paisa capital. The price volume strategy involves analysing the price and volume charts of a particular stock or market to identify patterns and trends. The aim is to use these patterns to predict future price movements and to enter or exit trades based on these predictions.

Strategies using Price Volume Screener

You can use several different techniques in the price volume strategy. Some of the most common ones include the following.

● Breakout trading: It identifies key stocks where the price levels struggle to break through. When the stock price finally breaks through this level, traders may see this as a sign that the stock is likely to continue moving in that direction and enter a trade accordingly.

● Trend following: This involves identifying the direction of the movement in the market and entering trades in that direction. Additionally, traders may look for trends in price and volume charts to confirm the direction of the trend.

● Support and resistance trading: This involves identifying critical market support and resistance levels and entering trades when the price approaches these levels. Traders may look for high volume levels to confirm their significance.

● Volume analysis: This involves analysing the volume chart to identify patterns and trends in the trading volume. Traders may look for changes in volume that do not match corresponding price changes, which could indicate a potential price reversal.

Overall, the price volume strategy is versatile, and you can apply it to various trading styles and timeframes. By using the relationship between price and volume to identify patterns and trends, traders can make more informed decisions about when to enter and exit trades, which can help them achieve better market results. However, as with any trading strategy, it is essential to use appropriate risk management techniques to minimise potential losses.
 

Real Life Examples of price volume screener

Let's look at an example of a price volume screener in the Indian stock market using the free screener tool on the National Stock Exchange of India (NSE) website.

The first step is to select the market segment and the exchange. For this example, let’s choose the "Equity" market segment.

Next, we will apply the following filters:

1.  PVT has been increasing for the last five days
2. Volume has been increasing for the last five days
3. Price increases for the last five days

These filters will help us identify stocks with intense buying pressure in the market.
After applying the filters, the screener presents a curated list of stocks meeting the set criteria. Among them is SBI, a frontrunner in India's publicsector banking space. Over the past few months, SBI’s stock has surged, driven by a remarkable uptrend and significant buying interest.

Delving into the PVT chart, we observe a consistent rise alongside the stock's price, signaling robust buying momentum. The volume chart further corroborates this trend, with increasing trading activity mirroring the stock’s upward trajectory. This alignment between price and volume showcases substantial market confidence in SBI.
The price chart paints a clear picture of SBI’s strong momentum, reinforcing its position as a stock to watch. Based on the screener's analysis, SBI emerges as a compelling opportunity for traders and investors seeking to ride the wave of intense market buying pressure.

Risks and Limitations of Price Volume Action

1. Misinterpretation of Trends: 
Price volume trends may sometimes provide conflicting signals, leading traders to misinterpret market direction. This can result in poorly timed trades.  

2. Lagging Indicator:  
The Price Volume Trend (PVT) is a cumulative measure, making it a lagging indicator. It may not reflect sudden market changes or reversals immediately.  

3. Dependency on Accurate Data:  
The effectiveness of price volume action heavily relies on accurate price and volume data. Any inaccuracies can lead to flawed analysis and decisions.  

4.ShortTerm Volatility:  
In volatile markets, price volume patterns can become erratic, making it challenging to discern genuine trends from noise.  

5. Limited Context:  
Price volume action does not account for broader market factors such as news, economic indicators, or geopolitical events that may significantly impact stock movements.  

6. Overreliance on Technical Indicators:  
Focusing solely on price volume action may lead to overlooking fundamental analysis, which is equally critical for longterm investing.  

7. Market Manipulation Risk:  
Stocks with low liquidity can be prone to manipulation, where artificial price and volume movements could mislead traders relying on price volume analysis.  

8. Time-Consuming:  
Analyzing price and volume trends for multiple stocks can be resourceintensive, requiring significant time and expertise.  
9. Ineffectiveness in Certain Markets:  
Price volume analysis may not work effectively in markets with low liquidity or irregular trading volumes, limiting its applicability.  

10. No Guarantee of Success:  
Despite its utility, price volume action is not foolproof. It should be used as part of a broader strategy, combining technical and fundamental analysis.

Things to Consider Before Following Strategies Based on Price Volume Action

• Market Conditions:
Ensure the market conditions align with the strategy. Price volume action strategies work best in trending markets but may falter in range-bound or choppy markets.

• Stock Liquidity:
Check the liquidity of the stock. Strategies based on price and volume action are more effective in highly liquid stocks where price movements are less likely to be manipulated.

• Volume Spikes:
Evaluate if the volume spikes are genuine or caused by one-time events like block trades or news announcements. Unusual volume without price movement can signal false trends.

• Confirmation from Other Indicators:
Use additional technical indicators, such as Moving Averages or RSI, to confirm signals derived from price volume action to avoid false signals.

• Fundamental Analysis:
Combine price volume analysis with fundamental research. Stocks with strong fundamentals are more likely to sustain trends than those driven by speculation.

• Risk Tolerance:
Understand your risk appetite and the potential drawdowns associated with price volume action strategies, especially in volatile markets.

• Timeframe Suitability:
Ensure the chosen strategy aligns with your trading or investing timeframe. Price volume strategies vary in effectiveness based on intraday, swing, or long-term trading approaches.

• News and Events Impact:
Be aware of any corporate announcements, economic data, or geopolitical events that could disrupt the price volume trends.

• False Breakouts:
Validate breakouts with strong volume to avoid acting on false signals, which can occur due to temporary fluctuations or market manipulation.

• Divergence Analysis:
Check for divergence between price and volume trends. Confirm the signal with other indicators to reduce the risk of acting on misleading patterns.

• Historical Performance:
Back-test the strategy using historical data for the stock or market segment. This helps assess its reliability before applying it in live trading.

• Stop Loss and Exit Strategies:
Define clear stop loss and exit criteria. Price volume action can sometimes lead to sudden reversals, so having a risk management plan is critical.

• Sector and Industry Trends:
Assess the broader sector or industry trends as individual stock performance is often influenced by the overall industry performance.

• Data Quality:
Use accurate and up-to-date price and volume data. Poor data quality can result in incorrect analysis and unreliable signals.

• Emotional Discipline:
Avoid impulsive decisions based solely on price volume action. Stick to the strategy and avoid overtrading based on every signal.

• Brokerage Costs:
Consider the transaction costs involved, especially for high-frequency trading strategies relying on price volume action.

• Strategy Adaptability:
Be prepared to adapt the strategy based on changing market dynamics or new insights from performance reviews.

• Market Hours Analysis:
Analyze price volume trends during different market hours. Trends during the opening or closing hours may differ significantly from the rest of the trading session.

• Regulatory Factors:
Stay informed about any regulatory changes or restrictions in the market that could impact price volume trends or trading strategies.

By considering these factors, you can enhance the effectiveness of price volume action strategies and mitigate potential risks associated with their application.

Conclusion

The price volume action screener is a powerful tool that can help traders and investors identify potential trading opportunities and provide valuable insights into the stock's price movement. It is based on the concept of price volume trend, a simple but powerful indicator you can use in various ways to analyse the stock market.

In the Indian stock market, the price volume screener can identify stocks with solid buying or selling pressure. By applying suitable filters and analysing the PVT, volume, and price charts, traders and investors can identify potential trading opportunities and make profitable trades.

Overall, the price volume screener is a valuable tool that can help traders and investors make informed decisions and maximise their profits in the stock market.