Relative Volume Scanner
How do you set up a relative volume scanner? In this little tutorial, I’ll guide you through a 5-minute process of setting up a real-time scanner with Benzinga Pro. If you don’t have Benzinga Pro yet, consider joining the 14-day free trial here.
I’ve also added a tutorial for Trade Ideas to scan for high relative volume stocks.
Create a Relative Volume Scanner
Open Benzinga Pro
First, start Benzinga Pro and log in here.
Create a New Scanner
On the left in the navigation menu, select Scanner.
Define the Scanner Criteria
Now, you have a new scanner window. To define it, first click on All and then type in RVOL in the top right search box at Search Filters.
Here, you can choose between 5 variants of the relative volume scanner.
- RVol(90D) (compares today’s volume to the 90-day average)
- RVol1m10d (compares the relative volume in the past 1 minute to the 10-day average volume for the same period as a ratio)
- RVol5m10d (compares the relative volume in the past 5 minutes to the 10-day average volume for the same period as a ratio)
- RVol5m30d (compares the relative volume in the past 5 minutes to the 30-day average volume for the same period as a ratio)
- RVol5m90d (compares the relative volume in the past 5 minutes to the 90-day average volume for the same period as a ratio)
For this tutorial, I chose the RVol1m10d to see stocks that are on a high relative volume right now compared to the average volume typical at this time of the day. I use Over 5 as my filter criteria. So, show all stocks that are currently trading at 5 times higher volume than typical at this point of time in the 1-minute time frame.
Show the Column RVol1m10d
I like sorting results by the highest relative volume to the lowest. We needed to add the Rvol1m10d column to our relative volume scanner to make that happen. To do so, click on Columns and type in Rvol. Select the one you like to work with. In my case, its RVol1m10d.
Now, you can sort the column from the highest to the lowest by clicking on the RVol1m10d column header.
Filter Further Down
I don’t like stocks that trade on high volume but with low overall volume. Highly liquid stocks with low spreads are best to day trade, so I filter down the results further.
Again, I click on All, and then I type in volume. I would only like to show stocks with a minimum today traded volume of 500,000 shares.
Also, I don’t want to trade penny stocks below $5. To apply this filter, I type Price in the search box and select Prive Over 5.
Finally, I only want to show common stocks, but no ETFs, no ADRs. To make that happen, I now click once again at All, type in Type in the search box and select Stock as Type and Common as Sub-Type.
Relative Volume Scanner Completed
Now you have set up your first relative volume scanner filtered by common stocks with a price higher than 5 dollars with a minimum volume of over 500,000 shares traded today, and a minimum relative volume ratio of 5 in the 1-minute chart compared to the 10-day average for this time of the day.
You can play around with additional filters or change the refresh rate from 10 seconds to real-time if you want ultra-fast updates or a lower update rate.
Make sure to save your scanner so that you can use the saved relative volume scanner directly whenever you need it again. To do so, click on the little disc Save Config As.
What Is Relative Volume?
Relative Volume is a trading indicator primarily used by day traders that compares the current trading volume relative to the usual trading volume in the past.
The metric volume reflects the number of shares traded of a specific stock. All charting platforms have that information about the currently traded volume available, and typically the trading volume is visualized below the chart with pricing action.
The most popular relative volume indications are:
- Current day volume vs. previous day volume
- Current day volume vs. 5-day average trading volume
- Current day volume vs. 10-day average trading volume
Let’s say the current day trading volume for a small-cap stock is 5,000,000 shares at 10 AM EST in the morning, and yesterday’s trading volume was 500,000 shares in total. The relative volume is 10:1. In the list below, the leading stock HZAC has 94.83 times higher volume than usual.
I’ve also added a tutorial for Click Here To Find Relative Volume Leaders With Trade Ideas to scan for high relative volume stocks.
What To Do With the Information About Relative Volume?
As a day trader, you want to trade liquid stocks with low spreads to ensure excellent fills. The higher the volume of a given stock, the lower the spread between Bid and Ask.
Small spreads are favorable for good order executions since the slippage, which reflects the difference between the price you aimed for and your fill price, will be less significant.
A high relative volume means that the demand for the particular stock is relatively high right now. This is typically caused by a catalyst like earnings announcements, mergers, or other news. Hight relative volume also often appears together with a huge gap at the market open. That’s the case when the news came out during the market close.
How To Identify High Relative Volume?
High relative volume can be easily identified by using a stock screener. My favorite is Trade Ideas since I can easily combine the filter for a gap of at least +3% along with the filter of high relative volume of at least 3:1.
Some brokerage platforms allow you to code your own relative volume indicator, and some platforms have a pre-defined indicator often called RVOL.
What To Do next?
The high relative volume filter helps get your watchlist down to a manageable list of shares for a specific trading day. Now it is essential to check if the supply and demand remain at a high level. Sometimes it happens, that one huge block trade leads to the high relative volume ratio.
In this case, the stock should be dropped from the watch list when the trading volume gets thin after that. I always want to see high relative volume whenever I get into a trade, so whenever the volume drops sharply, I don’t care about that stock for the day anymore.
How To Get Started?
High relative volume needs to be combined with a trading strategy. Breakout strategies work well on high volume. That can be new daily highs, higher highs, higher lows with bar by bar confirmation or even a breakout within a specific time-frame above the previous candle high.
Understand relative volume as a filter to reduce the number of stock symbols you are looking at. High relative volume stocks tend to be better tradeable and manageable than stocks with a relatively low volume ratio.
In a perfect world, you use the gap and go strategy and find a stock with high short interest that gaps up sharply on high relative volume ratios like 3:1 that keeps momentum aftermarket open by making clean technical moves on a candle-by-candle basis keeping the high volume.
Keep in mind that the list of high relative volume leaders often correlates with the most volatile stocks. It is important to keep an eye on the bid ask spread on those stocks.
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