But all the existing methods of volume analysis and order flow analysis fall into the same trap: they're all extremely complicated, hard to learn, and difficult for the human brain to distill down to an actual, tradable signal.
The Relative Volume Gradient Paintbars indicator seeks to address this issue by reducing and simplifying concepts from Volume Price Analaysis (VPA), Volume Spread Analysis (VSA), and Market Profile / Volume Profile into a single indication with varying levels of intensity. Rather than adding more complex symbology and cluttering up your charts with arrows and signals and lines as many volume indicators do, relative volume intuitively takes advantage of the dimension of color, and plays to your brain's automatic recognition of color intensity to highlight areas of interest on a chart where large volumes are being traded. These areas can in turn point out levels of support and resistance, or show strength in a move, exposing the actions of larger market participants that are behind a move.
The Relative Volume indicator can calculate based on a time-segmented / time-based / bar-specific average of volume, adjusting for some of the typical spikes in volume that happen at the beginning and end of a trading day; Or it can be calculated based on any length and type of moving average of volume that is desired: simple, exponential, weighted, Wilders, price-weighted, Hull, or TEMA.
This indicator does more than just normal relative share volume. It can also do relative volume-per-range. The idea behind this setting is that when more volume is being traded but very little movement is happening, this can indicate substantial support or resistance, where a lot of trades are likely being absorbed by larger operators. You can choose your own range calculation for this setting, whether you prefer True Range, high-low range, candle body range, close to close range, or any of several other custom settings.
Moreover, the levels or thresholds at which the color intensity changes are completely user-controlled, so you can adjust them upward to tune out more noise, or downward to increase the level of sensitivity. In addition, all of the colors for each of the thresholds are completely user-controlled.
We hope to see TradingView add support for Richard Arms' CandleVolume or Equivolume before too long, as well as Tick Volume or Trade Count Volume data, all of which can add a lot of power to this method of trading.
Phát hành các Ghi chú
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Added options for dollar-based volume which can be good on longer term charts and cryptocurrency charts like BTCUSD:
$ Volume
$ Volume/Range
$ Volume / Range %
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Added Candle Range + Wicks, ignoring gaps, as an option for the range calculation.
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Fixed a negative value issue on HULL ma type.
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Updated defaults.
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Updated documentation and comments.
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Fixed a small bug related to the threshold5 coloration.
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Updated to Pine Script version 5, added some error handlers.
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I use this set to show the relative volume divided by range. When this value is high, it indicates difficult movement ... i.e., lots of nearby support/resistance, a "thick" limit order book, etc. When this value is low it indicates ease of movement ... i.e., little nearby support/resistance, and a "thin" limit order book. This can be good for if you have an area of interest already and price is approaching that area, the relative volume per range can be good for confirming that support/resistance in real time.
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2024-03-15 Updated script to include color selectors on the main input screen so they're easy to identify and edit based on threshold.
Most large scale / institutional traders utilize the Zanger (cumulative) ratio and not RVOL. Many go further and use a Specific Bar Ratio that compares a specific 5m bar to the 20 day average of that exact bar/time. For these reasons, RVOL is not vastly relied on by big money.
easycators
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@kmack282, I like those other forms of volume analysis as well, along with just raw volume. But I wouldn't tend to be overly concerned with whether big money uses RVOL or not, I would be more interested in whether it can be useful for finding the footprints of big money. There's a lot of noise in volume but there are ways of getting to the signal, and one such way is looking at volume/range or volume/ticks instead of raw volume, which is how I use this indicator.
easycators
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Just gotta say ... called this current move on BTCUSD live on video on my Youtube channel using the 4/29/19 Relative Volume signal, as documented on my April 30th Youtube video on my Easycators channel. This stuff really works if you know what you're looking for.
Release notes 2024-02-09 since I forgot to post update notes with it: 1) I separated out the display vs. the coloration, so you can use one mode to color the bars and a different mode to view the bars. Updated Z-Score mode. Added alert conditions. And cleaned up the code and simplified some of it, and cleaned up the settings as well.