Better Volume

This is a version of the Better Volume Indicator from Barry Taylor’s Emini Watch. It studies the relationship between the spread (range) and volume, i.e. Volume Spread Analysis (VSA). Our version also comes with the option of activating the Relative Volume calculation.

Better Volume Indicator Download and Volume Spread Analysis for NinjaTrader 8

Indicator Description

This Better Volume indicator download facilitates Volume Spread Analysis (VSA), identifying the following events:

Breakout or climax bars: A breakout or climax bar is a wide range high volume bar for which the the product “volume times range” is higher than for all preceding bars of the lookback period.

Churn bars: A churn bar is a narrow range high volume bar for which the ratio “volume per range” is higher than for all preceding bars of the lookback period.

Climax churn bars: A climax churn bar is a high volume bar that qualifies both as a climax bar and as a churn bar.

Low volume bars: A low volume bar is a bar which has a lower volume than for all preceding bars of the lookback period.

The Better Volume indicator uses two lookback periods. A longer lookback period identifies stronger climax and churn bars (high volume bars). The shorter lookback period identifies weak climax and churn bars (low volume bars).

A breakout or climax bar may occur at different locations. It can start a trend as a breakout bar. However, it may also indicate that an existing trend continues after a period of consolidation. Finally, it may occur at the end of a trend and indicate that the trend is near exhaustion.

This bar type (breakout or climax bars) are similar to classical gap scenarios. On daily charts we distinguish between runaway gaps, continuation gaps and exhaustion gaps. Accordingly, breakout or climax bars can be compared those scenarios when trading shorter timeframes.

Relative Volume:

When you use the Better Volume indicator with intraday data, it is pretty much distorted at the beginning of the regular session. When compared to pre-session bars, all the bars in the beginning of the regular session look like high volume bars, which in turn leads to false signals. You may correct this behavior by applying the Better Volume indicator to “relative volume” instead of “absolute volume”. Accordingly, this version  allows for Volume Spread analysis on both absolute volume and relative volume. For additional information on the Relative Volume indicator, please refer to this blog post. For instruments that lack reliable volume information (FX/Crypto currencies), you may consider using the Relative Ranges indicator, which was discussed this post.

Sound Alerts: The indicator comes with sound alerts.

Market Analyzer Column: Market analyzer columns are included with the install file. The market analyzer column will return bar codes for each type of signal:

  • strong climax churn bar = 0
  • strong climax bar = 1
  • strong churn bar = 2
  • weak climax churn bar = 3
  • weak climax bar = 4
  • weak churn bar = 5
  • low volume bar = 6
  • upclose no signal bar = 7
  • downclose no signal bar = 8
  • doji no signal bar = 9

Based on these values you may define cell conditions and show the signals as text with background color on the market analyzer.

Other Library Indicators

For ideas on how to use the indicator you may consider reviewing our posts on the TDI indicator or the Squeeze momentum setup. Furthermore, the Better Volume indicator may be used in combination with Trend FiltersTrend Analysis and Momentum Oscillators such as the Adaptive LaguerreADXKnow Sure Thing or the Heikin Ashi candles for determining market trends. Support / resistance indicators are located the Session Tools category and we have a post on Fibonacci retracement levels. Finally, make sure to also check out the Range Analysis indicator, identifying narrow range patterns as discussed here.

The Better Volume indicator download is available for NinjaTrader 8.