There are thousands of **technical indicators** in the market (here we listed just some of them). These indicators are useful because they **help traders** forecast the movement of a financial asset like currencies, stocks, and commodities.

These indicators can be relatively simple to calculate. For example, the simple moving average is calculated by just adding the closing prices and dividing it with the periods. Other indicators are usually calculated using complex mathematical formulas.

In this report, we will look at the **Klinger Volume Oscillator** (KVO). This is an indicator that is not very popular and one that is **relatively difficult** to calculate (but it doesn't mean it's not useful).

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## What is the Klinger Volume Oscillator?

The Klinger Volume Oscillator was created by Stephen Klinger (introduced for the first time in a '*Stock and Commodities Magazine*' article, in December 1997). As the name suggests, the indicator **combines the concept of volume and that of oscillators,** and it was developed to be** both short-term sensitive and long-term accurate**.

As we have written before, **volume is very essential** in trading because it helps show the seriousness of the movement of a financial asset. For example, a sharp increase in price of a currency that is not supported by large volume can turn out to be a **false breakout**.

When applied **in** a **chart**, the **KVO** indicator **is **usually seen as** two lines and a centreline**.

### Formula: How the KVO is Calculated

The Klinger Volume Oscillator is calculated using a relatively long and complex mathematical calculation. Therefore, as a trader, it is not mandatory that you know how to do this computation. Instead, you should learn how to interpret the indicator in a chart.

The **first step** of calculating the KVO is to **find the VO**. You get this by subtracting the 34-period EMA of VF from the 55 period EMA of VF. The **VF is the volume force**. This VF is calculated using the following formula:

VF = V x [2 x ((dm/cm) – 1)] x T x 100 |

In this, the V is the volume while T is the trend.

**Trend** is calculated using the following formula:

Trend = +1 if (H +L+C) > (H_{-1 }+ L_{-1 }+ Cv_{-1}) |

In this, H is the high, L is the Low, and C is the closing price.

## How to Trade with the Klinger Oscillator

### Read the KVO

As mentioned above, the Klinger Volume Oscillator is made up of two lines and the centrelines. At default, the **two lines** are usually red and blue in colour. The **blue** line **is the signal** while the **red** line **is the Klinger**.

As with most indicators with two lines, **the key points to watch are** when a **crossover** happens between the two lines. **Another** level to watch is **when the two lines pass the centreline.**

### Buy & Sell signal

A **buy** signal is usually formed when there is a **crossover** between the two lines when it is **below the centreline**. A **sell** signal, on the other hand, is formed when there is a **crossover** between the two lines when they **are above the centreline**.

A good example of this is shown on the chart below. Notice the red and pink lines.

### Combining KVO with other indicators

As you can see above, there are **times when** the **crossovers** **don’t precede a direct movement of the price**. Therefore, it is usually recommended to **combine the indicator** with other popular indicators. This strategy applies to other technical indicators as well.

A good indicator to combine it with is the alligator. A good example of this at work is shown below.

Other popular technical indicators that you can use in combination with the Klinger Volume Oscillator are** trend indicators like Bollinger Bands, Relative Strength Index (RSI), and MACD**.

The chart below shows the Klinger indicator used together with the MACD. As you can see, the two usually moves in a similar direction.

In addition to these indicators, it is required that you **use several charting tools** when using the KVI indicator. Some of these tools are the Fibonacci retracement and Andrews Pitchfork. Also, you should use other chart patterns like **triangles**, **head and shoulders** and **pennants** in your predictions.

### Trading divergences with KVO

The next trading strategy to **use** with the **Klinger oscillator** is **to find divergences**. A divergency situation happens when the price of an asset is rising while the indicator is moving in the opposite direction, and vice versa. **A divergence usually leads to a change of direction of the financial asset**. An example of this is shown in the Apple chart shown below.

The only challenge with using divergence in trading is that **the pattern takes so long to form**. As such, it is not a popular strategy to trade.

### Key Take-Away

The Klinger indicator is not a popular among traders. You should give it a try when you are creating your trading strategy and see whether you will love it.

If you won’t love it, you can try using other indicators that we have covered before like the Relative Strength Index and Bollinger Bands.

#### External Useful Resources

- Klinger Oscillator Definition - Investopedia
- Sample strategies about Klinger - Tradingview