Understanding market momentum is essential for traders aiming to capitalize on short-term price movements. One powerful tool that helps uncover hidden opportunities is the Relative Volume (RVOL) indicator. When integrated into Thinkorswim, a popular trading platform by TD Ameritrade, RVOL becomes an invaluable asset for identifying unusual trading activity and potential breakouts. This guide explores how to implement and interpret the RVOL indicator effectively, covering free, built-in, paid, and custom-coded options.
What Is the Relative Volume (RVOL) Indicator?
Relative Volume, commonly referred to as RVOL, compares a stock’s current trading volume to its average volume over a defined historical period—typically the last 10 days. The result is a ratio that reveals whether trading activity is higher or lower than usual.
- RVOL = 1.0: Volume is at its average level.
- RVOL > 1.0: Elevated trading interest—could signal accumulation, breakout potential, or news-driven movement.
- RVOL < 1.0: Below-average volume—often indicates low interest or consolidation.
For example, a stock with an RVOL of 2.5 is trading 2.5 times its average volume, suggesting strong market participation that could precede significant price action.
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Built-In Option: RelativeVolumeStDev on Thinkorswim
Thinkorswim includes a native study called RelativeVolumeStDev, developed by Melvin E. Dickover. This indicator not only calculates relative volume but also measures it in terms of standard deviations from the mean, helping identify statistically significant spikes.
Key features:
- Uses a 10-day average volume baseline.
- Highlights deviations using standard deviation bands.
- Available directly within the Thinkorswim platform under “Studies” → “R–S” library.
This built-in solution requires no installation and is ideal for beginners or those who prefer platform-native tools. It's particularly effective when scanning for premarket movers or intraday volatility surges.
You can learn more about the underlying theory through resources like Wealth-Lab’s TASCApr2014 documentation, which influenced Dickover’s methodology.
Free Community-Created Alternatives
The Thinkorswim scripting community, especially on forums like usethinkscript, has developed enhanced versions of the RVOL indicator. These are often more customizable than the default version.
One widely discussed script is the Unusual Volume Moving Average Scan, which offers three variations:
- Simple relative volume comparison.
- Weighted moving average integration.
- Color-coded visual alerts for rapid identification.
A key advantage of these user-built scripts is flexibility—you can adjust colors, thresholds, and timeframes. For instance, some traders modify alert colors to avoid visibility issues (e.g., changing yellow text that blends into chart backgrounds).
⚠️ Pro Tip: Always compare volume during equivalent market hours—like the first hour of trading across multiple days—to ensure accuracy. Comparing opening volume to closing volume introduces bias due to natural intraday volume fluctuations.
These scripts are open-source and regularly updated, making them reliable for active traders who want advanced features without paying.
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Paid Solution: Premium RVOL Indicators
For those seeking polished, feature-rich tools, a one-time purchase option exists through third-party developers. One such product claims to be the only dedicated RVOL indicator for Thinkorswim, offered by scriptstotrade for $97.
Features include:
- Real-time RVOL tracking with historical comparisons.
- "Last Gap Up RVOL" function—shows volume behavior during previous gap-up events compared to current ones.
- Regular updates and customer support.
As of its launch, the tool received overwhelmingly positive feedback—with six out of seven reviews rating it 5 stars. However, one 4-star critique noted the lack of historical RVOL data visibility, which limits backtesting capabilities.
While not independently verified, the existence of such demand suggests there's room for improvement over free versions—especially for traders needing robust analytics and seamless integration.
Can You Code Your Own RVOL Indicator?
Yes—and many do. Freelance platforms like Upwork occasionally list jobs for developers to create custom RVOL indicators tailored to specific strategies. This raises an important question: why pay $150+ for something that appears freely available?
Possible reasons include:
- Need for multi-timeframe analysis not supported in standard tools.
- Integration with other indicators (e.g., VWAP, RSI) in a single script.
- Custom alert logic based on proprietary trading rules.
- Support for premarket-only or extended-hours volume analysis.
Creating your own script offers full control and eliminates dependency on third-party tools. Thinkorswim uses ThinkScript, a domain-specific language designed for technical studies, which allows coders to build powerful custom indicators.
Even non-coders can benefit by collaborating with developers or adapting open-source templates from community forums.
How Traders Use the RVOL Indicator
The RVOL indicator serves multiple strategic purposes:
1. Breakout Confirmation
A breakout accompanied by high RVOL (e.g., >2.0) suggests strong institutional or retail interest, increasing the likelihood of trend continuation.
2. Reversal Warning Signs
Declining prices with shrinking RVOL may indicate weak selling pressure—a possible reversal signal.
3. News & Event Reaction Analysis
Earnings reports, FDA approvals, or analyst upgrades often trigger RVOL spikes. Monitoring these helps assess market sentiment quickly.
4. Premarket Scanning
High RVOL before market open flags stocks poised for early momentum—ideal for day traders targeting morning volatility.
FAQ: Common Questions About RVOL on Thinkorswim
Q: How do I add the RVOL indicator to my Thinkorswim chart?
A: Go to “Studies” > “Edit Studies,” then search for “RelativeVolumeStDev.” Apply it directly to your chart without any coding.
Q: What’s the best period setting for RVOL?
A: Most traders use a 10-day average as it balances responsiveness and stability. Adjust based on your trading style—shorter periods increase sensitivity.
Q: Can RVOL predict price direction?
A: Not directly. RVOL indicates intensity of trading activity, not direction. Combine it with price action and trend analysis for better accuracy.
Q: Why does my RVOL show different values at different times of day?
A: Because it compares current volume within the same timeframe. For example, 10 AM today vs. 10 AM on prior days. This ensures fair comparison.
Q: Is high RVOL always bullish?
A: No. High volume can accompany both sharp rallies and steep sell-offs. Context matters—always check accompanying price movement.
Q: Can I scan for high-RVOL stocks on Thinkorswim?
A: Yes. Use the stock scanner and apply a custom filter using ThinkScript code from community sources to find stocks with RVOL above a threshold (e.g., >1.5).
Final Thoughts: Choosing the Right RVOL Approach
Whether you're a beginner relying on Thinkorswim’s built-in tools or an advanced trader using custom scripts, integrating Relative Volume (RVOL) into your workflow enhances decision-making precision.
- Beginners: Start with
RelativeVolumeStDev. - Intermediate users: Explore free scripts on usethinkscript.
- Professionals: Consider paid tools or commission a custom build.
Regardless of method, remember: context is king. High RVOL alone doesn’t guarantee profits—it must align with broader technical and fundamental factors.
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