Introduction to Projected Volume at Time (PVAT)
Volume is one of the most important indicators in technical analysis. It provides insight into the strength and sustainability of price movements. Traders often use volume to confirm trends, detect reversals, and identify potential breakouts or breakdowns. Among the various volume-based indicators, Projected Volume at Time (PVAT) is a unique tool that helps traders anticipate total daily volume at any given point during the trading session.
Projected Volume at Time estimates the total volume that will be traded by the end of the day based on the volume observed so far. This allows traders to gauge whether the current activity is above or below the average, helping them make informed decisions about entering or exiting trades.
Understanding Projected Volume at Time (PVAT)
PVAT is calculated by extrapolating the current trading volume using historical volume distribution patterns. It assumes that the volume trend seen so far in the trading session will continue for the rest of the day.
Why is PVAT Important?
- Identifying Unusual Volume Activity – PVAT helps traders detect significant deviations from normal trading volume. If projected volume is much higher than average, it may indicate institutional buying or selling.
- Confirming Breakouts and Reversals – Higher projected volume can confirm whether a breakout or breakdown is sustainable.
- Timing Trades – PVAT allows traders to determine optimal entry and exit points based on volume patterns.
- Filtering False Moves – Low PVAT indicates weak participation, making price moves less reliable.
Trading Strategies Using PVAT
1. Breakout Confirmation Strategy
Concept: When a stock breaks above resistance or below support, traders need confirmation that the breakout is valid. High PVAT confirms strong participation in the move.
How to Trade:
- Identify a key resistance or support level.
- Wait for the price to break the level.
- Check PVAT; if it is above the average daily volume, the move is likely valid.
- Enter the trade in the direction of the breakout with a stop-loss near the broken level.
Example:
- Stock XYZ has a resistance level at $50.
- At 10:00 AM, the stock breaks above $50 with high projected volume.
- PVAT indicates a total expected volume of 3 million shares (compared to an average daily volume of 2 million).
- Enter a long trade at $50.10 with a stop at $49.50.
2. Reversal Trading Strategy
Concept: A sudden increase in projected volume at key support or resistance levels can signal a reversal.
How to Trade:
- Identify stocks approaching major support or resistance levels.
- Watch for price rejection accompanied by high PVAT.
- If a stock reaches resistance with unusually high PVAT but fails to break higher, consider shorting.
- If a stock reaches support with high PVAT and bounces, consider going long.
Example:
- Stock ABC approaches a resistance level at $75.
- PVAT shows an unusual spike but price fails to move higher.
- Short at $74.90 with a stop at $75.50.
3. Low PVAT Strategy (Avoiding Fake Moves)
Concept: Fake breakouts often occur on low volume. If PVAT is significantly below average, a move may lack conviction.
How to Trade:
- Identify breakout attempts.
- If PVAT is low, avoid the trade or take a contrarian position.
Example:
- Stock DEF breaks above $100 resistance, but PVAT projects only 50% of its average daily volume.
- Avoid the breakout trade or consider shorting it as a false breakout.
4. Intraday Momentum Strategy
Concept: Stocks with high projected volume tend to continue their momentum.
How to Trade:
- Identify stocks with high PVAT early in the session.
- Enter in the direction of momentum.
- Use trailing stops to maximize gains.
Example:
- Stock GHI opens strong and PVAT projects double its normal volume.
- Buy early and ride the trend with a trailing stop.
5. Closing Session Volume Surge Strategy
Concept: Institutions often make large trades near the closing bell. If PVAT predicts a volume spike, expect increased volatility.
How to Trade:
- Monitor PVAT in the last hour.
- If PVAT suggests a volume surge, prepare for sharp price movements.
- Enter based on trend direction with tight stops.
Example:
- Stock JKL is up 2% and PVAT suggests a huge closing volume spike.
- Enter a long position with a stop below recent support.
Limitations of PVAT
- Not Always Accurate – PVAT assumes past volume patterns will continue, but sudden events can disrupt this.
- Market Conditions Impact Accuracy – News releases, earnings, or macroeconomic data can cause unexpected volume spikes or drops.
- Requires Context – PVAT should be used alongside price action, trend analysis, and other indicators for best results.
Conclusion
Projected Volume at Time (PVAT) is a powerful tool for traders to anticipate volume trends and confirm trade setups. By integrating PVAT with breakout strategies, reversals, and momentum trading, traders can improve their decision-making and avoid false moves. However, PVAT should be used in conjunction with other technical indicators and market analysis to enhance accuracy. Whether trading stocks, forex, or futures, PVAT offers valuable insights that can enhance trading performance and risk management.