The main principle of long-short index is to analyze the comparison of long-short market forces by calculating the changes of price and volume over a period of time. When multiple forces are strong, the index value will rise; When the air force is strong, the index will drop. By observing the change of index value, investors can understand the change of market sentiment and adjust trading strategies accordingly.
There are many methods to calculate the long-short index, among which the most commonly used method is BalanceofVolume (BOV). The calculation formula of BOV index is as follows:
BOV=[ (closing price-opening price) × volume]/total volume.
The closing price and opening price are the closing price and opening price of the day respectively, and the volume is the total volume of the day.
The value of BOV index is between-1 and 1. When the index value is greater than 0, it shows that many forces are strong. When the index value is less than 0, it means that the empty force is strong. Investors can judge market trends and trading opportunities according to the value of BOV index and its changing trend.
It should be noted that the long-short index is only a reference tool, and investors should also combine other technical analysis tools and market fundamental information when making trading decisions to reduce investment risks.