Saturday, January 24, 2009

The Importance of Relative Volume and More

These two charts show some very interesting concepts. I am not sure who coined the term Move out of the Middle (or MOM), but it is an incredibly important concept which I will point out often in this blog. On Friday, we had 4 periods of rotation forming a balanced area getting ready to pop. The longer the period of balance the greater the pop (we hope).

The 825 level was incredibly important yesterday. It was a high volume area from Thursday as you will see on the above chart and the market couldn't get above it on 4 tries.

I have Relative Volume set on my 30 minute chart (200 days). You will see on the lower chart that we had a statistical volume spike to 147% of the norm for that period over 200 days.

That gave me the heads up that a breakout was imminent. Which direction? I didn't know at the time. But when price broke strongly above 825, I waited for a pullback on the 5 tick reversal and 1.5 range footprint charts.

BTW, Dr Brett ( had a great post on Relative Volume and its importance in a Friday post. Check it out.

Also, take note of the fact that on a daily basis, the market has formed multiple days of balance. Which ever way it pops, look to your key reference areas above or below as targets and for bias.

Hope this helps,



  1. HELLO MGTrader, Congrats on your blog! Nice work within the beta version. I am spending time reconfiguring some charts too. Is it possible to upload the definition to your chart that has the relative volume on the 30 minute time frame to charthub? For the life of me, I cant figure out how to get that configured correctly on my chart. I like the fact that you can see that on the fly. If you can, Great, if you could help me understand how to program that, that is great too! Thanks a million. My website is or my email is
    Thanks again, and keep up the good work.
    Good trading to you, Best, SSK

  2. How can you see that the relative volume is 147%? The black line set to 100 is static and from your post it sounds like the 147% is for that time period not across all time. I don't have MarketDelta yet, but from watching your posts I'm looking forward to a trial.

  3. MJG2,
    The black line is static, but the height of the bar showed the top of the bar at 147% of norm for that period. This can easily be seen as the bar prints as the % is labeled real time in far right column. You can also hold a cursor over it and see clearly the level.

    The fact that it was 147% is not that important to me. What is important is that I could see at a glance that the bar bar was statistically very high compared to the other bars in the balance area and quite high for the specific period.

    Hope it helps,