How to Look at Morning Volume with TVOL

I wanted to highlight a particular ‘indicator’ in TradeStation and other trading platforms that allows you to compare relative volume off the opening session with prior opening sessions of the same length.

In TradeStation, the symbol is $TVOL – and here is what the current morning’s graph shows for the first hour’s volume in comparison with prior days:

(Click for full-size image – too small to read here)

The main idea is to compare the first bar of the morning – for whatever timeframe you are viewing – with prior bars of the same timeframe on prior morning opens.

I’m showing a 60-min (hourly) bar reading here as the first sixty minutes have elapsed this morning, and I want to know if we’re running at higher or lower volume than in the recent past.

As it turns out, we are much lower than we ‘should’ be on the first hour’s activity.  In fact, if we draw a horizontal line, there are only two days on the chart that have lower ‘total’ volume in the first hour.

You can compare the first 30 minutes, 15 minutes, or 5 minutes to get an idea on the activity in the broad market.

One other insight is that you can see closing day volume for each day – for example, volume activity spiked to a new high on the chart for September 1st and has trailed off each day, and likely will end lower today.

Of course, we have a 3-day market weekend, and holiday volume is always suspect (lower), so that’s likely the reason we’re seeing volume trail off ahead of the nice weekend.

This type of chart is particularly helpful on gap openings.  If price forms a large gap on higher relative volume, odds are much lower that the gap will fill when compared to a smaller gap on lower relative volume.

Hopefully this is just one more tool you can add to your trading arsenal!

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade