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In my head this makes sense, but not sure once put into practice and studied... if there is anyone else who thinks it also makes sense, I would appreciate someone creating a Sierra Chart indicator.
I use relative volume to trade UK equities intraday over a 15 minute to 1 hour timeframe and I gather and process volume data myself via a data feed into a spreadsheet.
I think it can be an excellent leading indicator in the sense that it gives a confirmation signal that momentum is likely to continue, but I don't have enough trades behind me to be sure.
Personally, in the UK main market, I find that any value above 200% of the average (I use a 30 day average) is usually significant, and trades that haven't gone well are ones where I've compromised and traded on perhaps only a 70% or 80% increase in relative volume. I only trade on highly traded equities because I think (but can't be sure) that thinly traded stocks are more vulnerable to random surges or large orders that don't mean much.
Another important point is that a very early big order in the first few minutes of trading can skew relative volume values for some time to come (e.g., vol at 5 mins becomes 400% after a big trade at the open, and by 15 mins is still 200%, even though trading was thin from 5 - 15 minutes) , so it's important to have the facility to monitor the relative volume for particular five minute bars as well as the relative volume from the open to a particular point in time.
It's also not the holy grail in the sense that you still need other confirming factors in your favour. However, I do think it increases the probability of momentum trades, and I'm working to confirm this.
Anyway, I wanted to share my experiences with this little-used indicator so far.
What setups have users here been using? Do you find that it confirms trends, or do you use it purely for spotting divergences? And what have been its limitations?
So is that why I can't overlay a Std. Dev. band on it? So I just need to figure out how to add a DataSeries for the Relative Volume and the Cumulated Ratio, right? I don't really need separate dataseries for the High, Low, and medium events.
The indicator does not plot any values within the first section of the bar series, as this is only used to collect the volume values against which today's and yesterday's volume is measured. Therefore you cannot easily use the relative volume as input series for a second indicator.
It would be possible to add a Bollinger Band as an additional option to the indicator.
There are no separate DataSeries objects for high, low and medium relative volume. It is just one DataSeries with different plot colors.
The first section of the bar series? I think I'm not following you here. I do understand that it's averaging the past values for the past 20 weeks and measuring the current volume value against the average value, and that it will only begin to plot after enough data has passed thru (and according to the Display value selected), but I take it this is not what you're referring to because if I've selected for it to display 3 weeks, I should at least have an accurate Bollinger Band value (100 period on a 3 minute chart of ES RTH session) after the first day it begins plotting, right? So the past 14 market days should show accurate Bollinger Band values, no? But I get no bollinger value at all. It plots 0, and only on the current bar and the first bar ago.
And when I try to use the plot in BloodHound, for instance to show when Relative Volume is > 200, nothing happens. It's as if the plot yields no value at all. I'm obviously missing something obvious and I'm starting to feel dumb...
@buddy858: I have coded this indicator about three years ago. It was not meant to be used as an input series for anything.
The reason that it could not be called was pretty simple. The indicator called ChartControl from OnBarUpdate without a null check. In case that such an indicator is used as an input series, it simply throws an exception.
I have fixed the issue and made a quick update. Please download again.
Let me point out once more that this indicator is old and is a resource hog. I will release a new indicator, as soon as I find the time to do it.