Volume Ratio (VR) Strategy (J)

21 oct. 2018

Thanks to the following script.
https://kr.tradingview.com/script/Olntkkuw-Volume-Ratio/

Definition:
Volume ratio can be obtained in a similar way to RSI .
Volume Ratio (%) = 100 - 100/(1+vr)
The parameter "vr" is defined as
vr=(A+U/2)/(D+U/2)

A=Total volume of the periods when the price advance.
D=Total volume of the periods when the price declined.
U=Total volume of the periods when the price unchanged.

After substitution, following expression can be derived and the denominator represents total volume of all periods.
Volume Ratio (%) = 100 x (A+U/2)/(A+D+U)

Notes:
A similar method to interpret RSI can be employed.
1) Overbought level over 70% and oversold level under 30%. These levels need to be adjusted according to the periods, time frames and issues.
2) Bullish picture over 50% line and bearish picture under 50% line.
3) Crossing oversold level to the upside can be taken as a confirmation of bullish reversal. - and vice versa for a bearish reversal.
4) After a long-term bearish market, the increase of volume can happen in the early stage of a bullish market.
5) Buying opportunity can be suggested when the volume ratio is declining and the price is either advancing or leveling off.

22 oct. 2018

Notes de version

color variation