An indicator (calculation) that compares current volume to historic volume for a given
contracts/instrument/asset and represents the answer as a percentage. Also known as
RVOL.
A trader needs to determine how he wants to calculate this:
- based on
ETH or
RTH
- what period does 'current volume' represent eg hour, day , week etc
- what historic period is current period compared to eg average of the last X hours, days, weeks etc
- is the historic calculation based on all historic time periods (eg last 30 days) or comparable historic time periods only (eg the last 7 Wednesdays compared to this Wednesday - being the current time period).
Example One:
A trader may want to compare today's volume (for ETH) as a % of the average of the last 30 days ETH volume.
Example Two:
A trader may want to compare the volume for Wednesday's 10am to 11am hour with the average volume for the previous 7 Wednesday's volume between 10am and 11am.
Note: the software used by the trader may limit the variations of RVOL calculations that can be performed.
See also:
https://www.smbtraining.com/blog/relative-volume-rvol-defined-and-how-we-use-it
https://www.investopedia.com/articles/basics/10/3-ways-tell-stock-bottom.asp
http://traderfeed.blogspot.com/2010/03/importance-of-relative-volume-is-it.html
http://traderfeed.blogspot.com/2009/01/relative-volume-and-volatility.html
https://www.thestockbandit.net/2010/02/23/relative-volume-on-demand/
https://benkotrader.wordpress.com/2011/05/30/measuring-relative-volume/
