Relative Volume (RVOL) is one of the most useful tools for day traders and swing traders looking to identify stocks with unusual activity. By comparing current volume to average volume, RVOL helps you find stocks that are in play. In this guide, we will explain how RVOL works and how to use it effectively.
What is Relative Volume?
Relative Volume is a ratio that compares current trading volume to the average volume for the same period. An RVOL of 2.0 means the stock is trading twice its normal volume. An RVOL of 0.5 means it is trading at half its normal volume.
Why RVOL Matters: Stocks with high relative volume are attracting more attention than usual. This often means something significant is happening, whether it is news, a breakout, or institutional activity. These are the stocks most likely to make meaningful moves.
How RVOL is Calculated
The basic RVOL calculation is simple:
RVOL = Current Volume / Average Volume
Example Calculation
Stock XYZ typically trades 1 million shares per day. Today, by 10:30 AM, it has already traded 500,000 shares.
On a normal day, the stock would have traded about 200,000 shares by this time (based on intraday volume patterns).
RVOL = 500,000 / 200,000 = 2.5
This stock is trading at 2.5x its normal volume for this time of day.
Interpreting RVOL Levels
Low RVOL (Below 1.0)
When RVOL is below 1.0, the stock is trading less than its average volume. This usually indicates:
- Lack of interest or participation
- Consolidation or waiting period
- Not a good time for momentum trades
Normal RVOL (1.0 to 1.5)
RVOL around 1.0 indicates normal trading activity. There is nothing unusual happening, and the stock is behaving as expected.
Elevated RVOL (1.5 to 3.0)
RVOL in this range suggests increased interest. The stock may be:
- Reacting to news or earnings
- Breaking out of a pattern
- Gaining momentum for a move
High RVOL (Above 3.0)
RVOL above 3.0 indicates significant unusual activity. This often means:
- Major news event (earnings, FDA decision, etc.)
- Institutional buying or selling
- Potential for a major move
Using RVOL for Stock Selection
Pre-Market Scanning
Many traders start their day by scanning for stocks with high pre-market RVOL. Stocks with unusual pre-market volume often have the most activity at the open.
Pre-Market RVOL Scan
Filter criteria:
- RVOL greater than 2.0
- Pre-market gap of at least 3%
- Price above $5
- Average daily volume above 500,000
This scan finds stocks that are in play and likely to have momentum at the open.
Intraday RVOL
Throughout the day, RVOL can help identify stocks that are suddenly getting attention. A stock that had low RVOL in the morning but suddenly spikes to high RVOL may be setting up for a move.
RVOL Trading Strategies
Strategy 1: High RVOL Momentum
Trade stocks with very high RVOL for momentum plays.
- Scan for stocks with RVOL above 3.0
- Look for a clear direction (strong up or down move)
- Enter in the direction of the momentum
- Use tight stops as high RVOL stocks can be volatile
- Take profits quickly as these moves can reverse fast
Strategy 2: RVOL Breakout Confirmation
Use RVOL to confirm breakouts.
- Identify stocks breaking out of patterns or key levels
- Only trade breakouts with RVOL above 1.5
- Higher RVOL suggests more conviction behind the breakout
- Avoid breakouts with low RVOL as they are more likely to fail
Strategy 3: RVOL Spike Detection
Watch for sudden RVOL spikes during the trading day.
- Monitor your watchlist for sudden increases in RVOL
- Investigate the cause (news, large order, technical breakout)
- Trade in the direction of the spike if there is a clear catalyst
- Be cautious as spikes can sometimes be short-lived
RVOL and Time of Day
Interpreting RVOL correctly requires understanding intraday volume patterns:
- First hour: Volume is typically highest. RVOL calculations should account for this.
- Midday: Volume typically drops. A stock with high RVOL during lunch is particularly noteworthy.
- Last hour: Volume picks up again. High RVOL in the final hour can signal end-of-day moves.
Good RVOL calculations account for these patterns, comparing current volume to the historical average for that specific time of day.
Combining RVOL with Other Indicators
RVOL and Price Action
High RVOL with strong price movement is the best scenario. High RVOL with little price movement may indicate absorption (buyers and sellers are equally matched) or accumulation/distribution.
RVOL and News
Always check for news when you see high RVOL. Understanding why volume is elevated helps you make better trading decisions.
RVOL and Float
High RVOL on a low float stock can lead to explosive moves. Low float stocks with high RVOL often have the most dramatic price action.
Common RVOL Mistakes
- Chasing high RVOL blindly: High RVOL alone is not a buy signal. You need direction and context.
- Ignoring time of day: Raw RVOL without time-of-day adjustment can be misleading.
- Trading illiquid stocks: High RVOL on a stock that normally trades 10,000 shares is different from a stock that trades millions.
- Not checking for news: Always understand why RVOL is elevated before trading.
Track Volume Across Your Portfolio
Pro Trader Dashboard helps you monitor volume activity across all your positions and watchlist. Get insights into which stocks are showing unusual activity and track your trading performance.
Summary
Relative Volume is an essential tool for finding stocks in play. By comparing current volume to average volume, RVOL quickly identifies unusual activity that often precedes significant moves. Use RVOL for stock selection, breakout confirmation, and momentum trading. Always consider time of day, check for news catalysts, and combine RVOL with price action analysis for the best results.
Learn more about volume analysis in our guides on Volume Breakouts and Volume Spread Analysis.