Relative Volume

Relative volume compares a stock's current trading activity with its usual activity over a comparable period. It helps answer whether today's volume is ordinary for this stock or unusually high or low.

A volume count becomes more meaningful when it has that comparison. Two stocks can each trade 500,000 shares this morning, yet only one may be having an unusually active morning.

Compare A Stock With Its Own History

Suppose Stock A usually trades about 100,000 shares from the regular-session open through 10:00 a.m. Today it trades 500,000 during that same period. Stock B usually trades 2 million shares by 10:00 a.m., but today trades only 500,000.

Their current share counts are equal. Compared with their own histories, Stock A is unusually active and Stock B is quieter than usual.

The comparison does not tell you which stock has more shares available at its current bid or ask. It measures completed trading, just as ordinary volume does.

The image uses a separate, completed-day example. Each stock trades 500,000 shares on Friday. Stock A's earlier daily average is 100,000 shares, giving 5.00x RVOL; Stock B's is 2 million shares, giving 0.25x. The dashed lines mark those daily averages. This comparison uses finished days, while the table above compares trading through 10:00 a.m.

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Match The Periods

For an intraday comparison, use the same session and the same elapsed time. Today's first 30 minutes should be compared with the first 30 minutes of earlier sessions, rather than with their entire days.

An opening interval can also differ from a midday interval. A stock may regularly trade heavily just after the open and more slowly at lunch. Comparing midday volume only with the opening bars could make ordinary midday trading appear unusually quiet.

For a swing-trading example, compare completed daily volume with previous completed days. A daily candle still forming has had less time to accumulate shares, so its volume is not yet directly comparable with a finished day's count.

What “Usual” Means

The comparison needs a chosen set of historical periods. An average of the previous ten sessions may differ from an average of the previous twenty. An unusually busy news day included in that history can raise the average.

For example, four earlier periods contain 100,000 shares each and a fifth contains 600,000. Their average is 200,000 shares. Today's 300,000 shares are 1.50 times that average, even though they are three times the count in each of the four quieter periods.

Neither description changes today's volume. They use different comparisons. Knowing the historical periods prevents the average from being mistaken for a fixed definition of normal trading.

Connect Activity To Price

Higher relative volume shows more trading than the chosen comparison period. Price can rise, fall or move sideways during that activity.

At resistance, an unusually active candle might close above the level or fall back below it. During a selloff, unusually high activity might accompany another decline. Relative volume cannot replace the price movement you are trying to understand.

A sudden large bar is a volume spike compared with nearby bars. Elevated relative volume can instead build across many intervals, without one dramatic spike. The two ideas overlap, but they answer different questions.

If a stock has traded twice its usual volume by 10:00 a.m., has it already traded twice its usual full-day volume? No. The comparison only covers the period through 10:00 a.m. It does not determine the final day's total.

The next lesson, Reading RVOL, explains how chart tools and stock scanners turn these comparisons into a number. A stock scanner lists stocks that meet selected conditions, such as unusually high volume.