Aug 19, 2009

In Response to Trusting Market Moves: Why Relative Volume is Important

Written by Katie Gomez

Let’s start with my comment first and then the excellent post this AM from the ever astute and keenly insightful Dr. Brett Steenbarger:

Glad to read your emphasis on the importance of ‘Relative Volume’ in determining how trustworthy market moves really are.
It’s the bedrock of much of our analysis at Trade-Ideas as you know. We express the concept as a ratio, placing the current accumulated volume up to any given point in the day over the historical average volume of the same period. A reading such as 1.5 means therefore that a particular issue is 50% above its normal volume. A reading of 7 means its trading 7x more than usual; and so on for readings of 0.6, etc.

Here was Brett’s original post: