Without meaningful volume, share prices often remain directionless and new trends don’t eventuate. Volume fuels volatility.

Good traders analyse volume closely to determine the underlying strength of share price moves, and attempt to identify the participation (or non participation) of institutional players in a stock.

Its always been straight forward to analyse volume at the end of the day by reviewing the daily volume bars on any end of day chart. What’s been harder to do is comparing the current days volume against previous periods, in real-time, during trading hours.

The reason being is the volume traded throughout any given trading day is not linear. Rather, trading volumes are typically highest during the first and last hours of the trading session, with the intervening hours seeing much lighter volumes. Furthermore, stocks have their own unique trading patterns which makes it even harder to accurately asses if a stock is being heavily traded or not.

Given the non linear distribution of volume, it’s important to compare today’s volume against previous days/periods to the same point in the day. Spark’s Relative Volume Indicator does this.

Spark’s Relative Volume Indicator can be displayed by mousing over any volume figure in Spark.

This indicator, which is updates in real time, shows the stocks current volume along with

  • yesterday’s traded volume at the same point in time
  • the average weekly volume normally traded at this point in time
  • the average monthly volume normally traded at this point in time

It also shows the actual difference and % difference of the current volume against these three periods.

Using the below graphic as an example we can see that by 11:14am Telstra had traded just over 67 million shares which was

  • 43 million shares or 39.1% less than yesterday
  • 29 million shares or 75.8% more than the average traded over the last week
  • 8.5 million shares or 14% more than the average traded over the last month
Closeup

Spark's Relative Volume Indicator

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Spark's Relative Volume Indicator in context - Click to enlarge

Screening for volume breakouts

The relative volume figures can also be displayed within Spark’s Watchlists and Smartlists. You can set these lists to display either yesterdays, the weekly average or the monthly average figures. The lists can then be ordered by “Relative VolumeĀ  %” to produce a lists of stocks with the largest volume deviations from their normal traded volume.

Relative Volume List - Click

Relative Volume in Smartlist - Click to enlarge

By using additional Smartlist filters you can refine this lists further to better identify trading opportunities. eg. Market cap > 300m or Number of trades > 50

Relative volume in Spark’s DDE feed

All relative volume figures are available in Spark’s DDE feed. More details here

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