Relative Volume RVOL Alerts

The Relative Volume RVOL Alerts indicator measures volume changes over a specific period to help traders identify how "in-play" a security is by comparing current volume to its historical average.

Usage

The Usage section focuses on identifying volume spikes that may precede or accompany significant price moves. Traders use RVOL to gauge the intensity of market participation.

• Identifying "In-Play" Assets: High RVOL values indicate that a stock or asset is experiencing significantly more interest than usual, often making it more suitable for day trading or momentum strategies.
• Volume Breakouts: Signal dots appear at the top of the indicator pane when the RVOL crosses either a user-defined threshold or a smoothed moving average. A green dot indicates a breakout on a positive candle close, while a red dot indicates a breakout on a negative candle close.
• Trend Confirmation: The indicator can be used as a substitute for standard volume bars to better visualize whether current volume is expanding or contracting relative to the norm.

Details

The script calculates the Relative Volume (RVOL) by dividing the current volume by a Simple Moving Average (SMA) of volume over a lookback period.

• RVOL Calculation: Relative Volume = Current Volume / Average Volume.
• Signal Logic: The indicator monitors crossovers between the raw RVOL and two potential triggers: a smoothed RVOL line (SMA of the RVOL itself) or a static numerical threshold.
• Smoothing: By applying a smoothing value to the RVOL, the tool filters out minor fluctuations, providing a clearer view of the volume trend.

Settings

• Period: The lookback period used to calculate the average volume for the base RVOL calculation.
• Threshold: A static value representing a significant volume level (e.g., 1.75 means 175% of average volume).
• Smoothing Value: The length of the moving average applied to the RVOL for trend analysis and crossover signals.
• Volume Breakout based on: Determines whether the breakout signals (dots) are triggered by crossing the Smoothing Value line or the static Threshold.

FAQ

How do I interpret the colored dots?

The dots represent a volume breakout. A green dot appears if the candle closes higher than it opened during a volume spike, while a red dot appears if it closes lower.

Does high RVOL guarantee price continuation?

No, high RVOL indicates a volume spike, which often occurs at market peaks or valleys. It should be used in conjunction with price action and other technical analysis tools.

How can I access this indicator?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.