A Guide to Relative Volume/RVOL Indicator on Thinkorswim
If you want to implement a Relative Volume/RVOL indicator on Thinkorswim we will show you the best options available to you, there are a couple of free options plus a ready-made paid version.
Relative Volume/RVOL Indicator on Thinkorswim: Included
One method to add a Relative Volume/RVOL Indicator on Thinkorswim is to use the free indicators developed by Melvin E. Dickover. The first is RelativeVolumeStDev and the input parameters and plots are given so you can try it out yourself. This is included on Thinkorswim itself.
Relative Volume (RVOL) measures the amount of trading activity in stock relative to its average activity level over a given period. Relative Volume can be used as a technical indicator to help identify potential breakout stocks.
You can find out more about the theory Melvin used here.
Relative Volume/RVOL Indicator on Thinkorswim: Free versions
The forum users on usethinkscript came together to create this code. The thread is constantly being updated right up to when this article was written on July 20th 2022 which is a good sign.
It is based off Dickover's RelativeVolumeStDev above and there are 3 slightly different variations of it.
If you are using the version from here then it is recommended you read this Twitter thread from the author as it gives tips on how best to use it. For example one user was able to modify the colors to get it the way they wanted it, apparently there was an issue with yellow text making certain information unreadable.
Once you get it up and running it should look like this:
Whatever one you use it is important that you don't make the mistake of comparing volumes at different times, for example you should keep it for the first hour at open on different days, and not first hour and last hour on different days.
There are other interesting related indicators, for instance here is the basis of a high relative volume/rvol scanner though the author does caution using it.
Relative Volume/RVOL Indicator on Thinkorswim: Paid
Another option is to buy what is claimed to be the only RVOL indicator on Thinkorswim from scriptstotrade which has a one-time fee of $97.
At the time of writing on July 19th 2022 there are 7 reviews with 6 of them being 5 stars and make it sound like the tool will change your life. Whether you choose to believe that it does or not is up to you.
In the one 4-star review the user wishes that you could see past RVOL. I haven't tried this tool myself but I would like to hear more about the disadvantages of it.
From the developers themselves they say it works by analyzing the average volume in a time frame and compares it to the volume in the same time frame from a previous day.
A good sign is that they have updated the indicator since launching it and it has a "Last Gap Up Rvol" feature so that you can see what the volume was on the last gap up day compared to today’s gap up at the current time.
Other options for Relative Volume/RVOL Indicator on Thinkorswim: Code your own
At the time of writing this article on July 19th 2022 there is a job opening on Upwork looking for someone to code a RVOL indicator on Thinkorswim.
We can only speculate as to the reasons why somebody is willing to spend $150 plus the time required to hire and co-ordinate somebody to code a relative volume indicator on Thinkorsiwm themselves, when as we have already shown there is a built-in way and a free way of doing it, and also a paid tool for $97.
Do these tools not fulfill the job poster's requirements? Do they need some more powerful functionality that the other versions don't have? Or indeed, have they discovered the infinite money glitch and now need someone to code it?
Understanding The Relative Volume/RVOL Indicator
Whichever of these methods you chose the underlying theory will be the same in each one.
Relative Volume (or RVOL) is a technical indicator that measures volume relative to the average volume, that is volume or number of shares traded, of the same security over a given period, usually ten days. RVOL compares current volume levels with past levels to gauge the intensity of trading activity.
An increase in volume often leads to a rise in price, while a decrease in volume can signal a potential reversal. Relative Volume can be a leading indicator for predicting future price movements.
For example, if it increases as prices rise, it may signify that the trend is gaining momentum and could continue.
Conversely, if RVOL decreases as prices fall, it could indicate that the trend is losing steam and may reverse.
The Relative Volume/RVOL study on Thinkorswim plots the relative volume for each bar, which is simply today's volume divided by the 10-period Average True Range (ATR).
RVOL spikes occur when today's volume surpasses recent ranges. Conversely, relative volume depressed values happen when today's volume is subdued compared to recent activity.
Connecting relative volume spikes or troughs with price action can help you anticipate significant price moves. Relative volume becomes even more valuable when analyzed in conjunction with
Applications of Relative Volume/RVOL Indicator on Thinkorswim
If you're a day trader, you understand how critical it is to access trustworthy information that allows you to make quick, informed judgments. A relative volume indicator can give you insight into current market circumstances.
It is a technical indicator that measures the average volume of a security over a specific period. Relative volume is calculated by dividing the security's current volume by its 10-day average.
The ratio of those ten days would be equal to 1.0. If security with an RVOL ratio of 1.0 over ten days suddenly increases to 2.0, it has twice the average volume. Likewise, if a stock's RVOL measures 0.50, it has half the RVOL of the prior 10-day average.
The indicator can identify stocks trading above or below their historical averages, which can help make trading or investment decisions.
Relative volume can give you a solid picture of whether there is currently high or low interest in a particular stock because it considers both the volume of trade and the asset's price movement.
Some charting tools, for example, will represent it as a line graph, whilst others would display it as a histogram.
Others may include the RVOL ratio in the order montage or another data window. It is critical to experiment with various settings to determine what works best for you.
You can use relative volume to your advantage and make better stock trading selections with practice.
Relative volume is not just used by day traders, it can be helpful for any investor looking at their investments with different perspectives and metrics.
Conclusion
You have a number options available to you to add a RVOL indicator on Thinkorswim. If you are an experienced coder then ny using any of the great scripts available on usethinkscript forum you can customize it exactly as you want.
Non-coders can simply use the RelativeVolumeStDev which is included. Or you can buy the paid version from scriptstotrade.
The theory behind it is that Relative Volume (manually computed or through a RVOL indicator on Thinkorswim) can indicate the volatility of a particular stock.
Stock with a high relative volume is more likely to be bought and sold than a stock with a low relative volume. As such, relative volume can be directly correlated to the potential trends in the market and help identify possible trends.
For example, if a stock has a high RVOL, there might be a heightened interest in the stock now or because the stock price is rapidly changing. No matter the reason, it only means that the stock is worth paying attention to.
Conversely, if a stock has a low RVOL, it can be because there is not much interest in the stock, or the price is stable.
The Relative Volume can be affected by earnings announcements, analyst upgrades, or downgrades. As a result, these events and new releases can impact the relative volume.
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