What is a Price by Volume (PBV) Chart?

A price by volume (PBV) chart is a horizontal histogram that shows a cumulative total of how many shares of a stock traded at a given price.

How Does a Price by Volume (PBV) Chart Work?

Mechanically speaking, a PBV chart is simply price, plotted as a line on the X axis, and volume, plotted on the Y axis as a bar. The longer the horizontal volume bar on a PBV chart, the more shares that are trading at a given price.

Here is a sample chart for Cisco Systems (CSCO):

price by volume (PVB) chart example

note that the longest bar relates to the $27.50-$32.50 price range, meaning that the most trading volume in this stock occurs when the shares are trading between $27.50 and $32.50. Obviously, lots of trading volume also occurs in the $32.50-$37.50 range, but relatively few buyers and sellers want to trade when the stock is in the $42.50-$47.50 range or anywhere north of $70.

Why Does a Price by Volume (PBV) Chart Matter?

PBV charts indicate the buying and selling interest in a stock at certain prices. Thus, instead of looking at trading volume at a given time as an indicator of a stock’s direction, PBV charts look at trading volume (that is, trading interest) at a given price as an indicator of a stock’s direction.

Accordingly, PBV charts help analysts try to predict when a stock will encounter support and resistance -- that is, when a stock will reach its top and bottom price. This in turn helps analysts decide when to buy and when to sell. It is important to note, however, that PBV charts are just one of many technical trading charts analysts can use.