Detecting Relative Volume Surges with a Capped Indicator

Summary

This ProRealTime indicator compares current volume with its moving average to highlight unusually large or small activity. It divides volume by a configurable average, with a default lookback of 60 bars, then caps the displayed ratio at an upper limit. Values above a threshold are colored green, intermediate values gray, and a separate transformed histogram emphasizes very low readings in red. The examples give different threshold settings for BTC timeframes, reflecting the author’s advice to adjust them for volatility and timeframe.

The document provides indicator code and parameter examples, but no backtest, trading rules, or evidence that the color signals predict returns. The display thresholds are discretionary, and the ratio is relative volume rather than a direct measure of price change. Users would need to assess how the calculation behaves across instruments, bar intervals, and volume data sources before using it as a signal.

Key ideas

• The indicator divides each bar’s volume by a configurable moving average of volume.
• The default lookback is 60 bars, and the displayed ratio is capped at an upper threshold.
• A threshold classifies relative volume as high, intermediate, or low for histogram display.
• The suggested thresholds vary by BTC timeframe, so calibration is intended to reflect volatility and bar interval.
• The document gives no performance testing or rules for entering and exiting trades.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.