Relative Volume Indicator for ThinkOrSwim


For many of you subscribe to the classical trading philosophies of legendary traders like Jesse Livermore and Richard Wyckoff, there is probably no need for me to further emphasize the importance of volume here. Over the years I’ve read many, many trading books, and after reading many of these classical traders’ books, pamphlets, and articles, I realized my current toolset for analyzing volume was insufficient.

Most trading websites tell you to watch for volume surges, and there are many ways of determining when a surge is happening. Some relative volume indicators simply check to see when volume is above its moving average. But these measures are highly inaccurate at certain times of the day. Volume is always going to be higher at the open and the close, and these extremes skew the moving average for several bars, making it basically useless during these times.

Few people realize it, but similar volume spikes often happen at hourly and half hourly increments throughout the day as well, which can further skew a typical moving-average based relative volume indicator.

So I discovered that what I really needed was a way to see what the average volume was for a specific bar at a specific time of day, and then to compare the current volume to that average to see if there was anything unusual going on. So I set about trying to develop ways of automating my volume analysis as much as possible, and making it abundantly obvious whenever there was a trading anomaly in the works. And that journey led to this set of ThinkScript studies for Thinkorswim, which provide an easy, visual way for stock traders to quickly determine if a tradable event is occurring.

How it works:

  • Each bar’s volume is individually averaged over a customizable look-back period (10 days by default).
  • The current bar’s volume is compared to its own particular average and ranked in relation to that average.
  • If the current bar’s volume is below average, it will be colored dark and you’ll see it below 100%; if it’s above average by user-defined thresholds, it gets brighter and brighter, finally turning bright red or green at extremely high readings, drawing your immediate attention.
thinkoswim relative volume columns
Thinkoswim Relative Signal Volume Columns for multiple time frames

What you get:

    • relative share volume indicator that tells you if the current volume is below average, just average, above average, or truly extreme.
    • relative trade volume (tick count) indicator that shows you the relative number of trades that are happening — or, said another way, the relative speed at which the tape is scrolling — indicating the amount of interest there is at the current price level.
    • A relative shares per trade indicator that shows you the average number of shares per trade for the current bar and whether or not it is an unusual amount. This is key. When you see this number jump you know the big boys have joined the party!
    • A relative shares per range indicator showing if there is a lot of volume being turned over but not much price movement happening. This is a similar concept to Volume Spread Analysis or “Better Volume”, but with a much easier to read signaling method, and it can be a POWERFUL INDICATOR FOR SUPPORT & RESISTANCE.
    • Find stocks showing high relative share volume, trade count or tick volume, shares per trade, shares per range, or even shares per trade per range … on whatever timeframe you want to trade!
    • Quickly sort your watchlist to bring the symbols with the most extreme volume signals (on any time frame you like) to the top of your list.
    • Several columns and a labels indicator to help you analyze overnight, premarket, and aftermarket volume levels on both a relative and absolute basis!

Hold up guys and gals: free tip…

I want to mention something briefly. This is actually my favorite indicator that I’ve ever posted on my site. I’ve personally found the bonus “shares per trade” indicator to be a substantial source of edge in my own trading and I almost question my decision to post it here because it is just SO good if you learn to use it. (Can you tell I’m excited about this one? 🙂 But (tragically/thankfully) most traders continue to ignore volume analysis altogether, even though it’s an obvious dimension of market information hiding in plain sight. So there’s probably no need to be concerned about divulging secrets … I’m guessing most traders will continue ignoring volume. Anyway, so this is my free insider tip: don’t ignore volume and trade count analysis. All candles look the same until you apply volume & trade analysis to help you separate the true moves from the false ones. To help you understand how to do that, I’ve also included a link to a playlist below where I’ve posted all my volume analysis videos, including actual volume-based trades I’ve taken using this indicator set.

Why you want it:

  • Find key turning points on the chart before the move is over. Identify where unusual buying or selling has begun to create a reversal and start building a position early.
  • See what the big boys are doing so you can follow in their wake and stay on the right side of the trade!
  • Separate the wheat from the chaff: see when a move has real impetus behind it versus being just another weak oscillation. This is key!
  • Never be fooled by the basic volume graph again. Your typical volume graph can lead you astray and trick you into thinking there is strong commitment behind a move when there really isn’t, or make you miss the moves that do have strong commitment behind them but are often impossible to find without the right tools!


thinkorswim relative volume on tick charts
Example of relative volume on a tick based chart of Macy’s. Key breakouts and trend reversals or pattern changes are often confirmed with high relative volume.


relative volume gradient paintbars indicator for thinkorswim
Example of some volume signals at important locations throughout a trend.


Relative Volume indicator for Thinkorswim
Relative Volume indicator for Thinkorswim – short term trades inside a longer term pattern


Thinkorswim Relative Volume Indicator Settings 1
Thinkorswim Relative Volume Indicator Settings 1


Thinkorswim Relative Volume Indicator Settings 2
Thinkorswim Relative Volume Indicator Settings 2


Thinkorswim Relative Volume Indicator Settings 3
Thinkorswim Relative Volume Indicator Settings 3