SBV Histogram

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Patent #: US 7,831,984 B2
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SBV Histogram is an advanced version of the SBV Oscillator. This indicator uses principles of the MACD calculation by applying an exponential moving average to the SBV Oscillator and calculating the difference between the SBV Oscillator and its signal line. Like the MACD, the SBV Histogram is constructed by three elements:

• Blue Line - SBV Oscillator
•  Red Line - EMA (also called the Signal Line) applied to the SBV Oscillator
•  Histogram - Difference between the SBV Oscillator and its Signal Line (EMA applied to the SBV Oscillator) - sound and email alert could be set to Histogram

The difference between the SBV Oscillator and the SBV Histogram is that the SBV Oscillator uses a horizontal signal line and, as a rule, signals are generated when the SBV Oscillator crosses a certain signal level (20% for instance). In the case of the SBV Histogram, the signal line is an exponential moving average that generates a signal when the SBV Oscillator intersects the signal line (when the Histogram = 0). The SBV Histogram allows a signal to be generated at a certain distance from the SBV Oscillator's tops and bottoms, which may be similar to the trailing signal.

If you compare signals generated by the SBV Oscillator and the SBV Histogram, you will see that, in the event of large bullish or bearish volume accumulations (when the SBV moves far below minus 20% or far above 20%), the SBV Histogram allows signals to be generated faster. When the SBV Oscillator moves closer to the center, the SBV Oscillator and the Histogram generate signals at about the same time.

As was previously mentioned, like the MACD, the SBV Histogram signals may be generated when the histogram crosses the center line (zero line). Some traders may prefer to use the SBV Histogram instead of the SBV Oscillator, some may continue to use the SBV Oscillator and some may combine the SBV Oscillator and the SBV Histogram in their analysis. On the one hand, the SBV Oscillator provides good visual evaluation of bullish and bearish volume accumulations (green and red SBV areas) and generates more conservative signals. On the other hand, the SBV Histogram allows one to react more quickly to changes in money flow and mood.

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