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Concept : Definedge
Volume refers to the number of shares traded in a stock or contracts traded in futures or options contracts.
When volume increases with price, the uptrend is considered strong since the price trend is supported by the volume increase, therefore activity is high.
Analysis of the rate of change of volume can be used to determine the trend of volume.
When we plot ROC of Volume, two lines are plotted on the chart.
1 – Volume ROC line
2 – Average of the Volume ROC line
The ROC line above the average line indicates that the volume trend is increasing and that it is a strong trend.
The price trend is bullish when the volume ROC line is above its average line. When the price trend is bearish and the volume ROC line is above its average line, it is considered bearish.
The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.
This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.
The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.