Volume Testing Dialog Box

Many investors believe that volume will rise before or during a large price move. Investigator lets you test this theory by allowing you to compare recent volume to volume over a longer time period.

First, select the time period and enter the number of bars ago value that you want to use for testing.

If you select the Average Volume Over Past: option, Investigator will calculate the average volume over the number of bars that you specify; otherwise, Investigator will use the volume on the current bar. We will call this calculation average 1.

If you chose the Volume On Current Bar option, Investigator will calculate the average volume over the past number of bars specified in the Than Over Past: edit box, excluding the current bar. If you chose the Average Volume Over Past: option, Investigator will calculate the average volume over the past number of bars specified in the Than Over Past: edit box, including the current bar. We will call this calculation average 2.

Investigator will take the average 2 calculation and multiply it by the percent value indicated in the Percent: edit box. If you selected the Higher option, Investigator will add this value to the average 2 calculation; otherwise, it will subtract this value from the average 2 calculation.

Investigator then does a comparison of average 1 and 2. If you selected the higher option and the average 1 calculation is greater than the average 2 calculation, then this condition would be considered to be true. If you selected the lower option and the average 1 calculation is less than the average 2 calculation, then this condition would be considered to be true.

For example, let’s say you entered 2 in the Average Volume Over Past edit box, selected the higher option, entered 6 in the Than Over Past: edit box, and entered 50 in the Percent: edit box. Assume we have the following volume quotes:

Bar 1: 1000

Bar 2: 2000

Bar 3: 3000

Bar 4: 4000

Bar 5: 5000

Bar 6: 6000

In this case, the condition would be considered true:

Average 1 Calculation:

5000 + 6000 = 11000

11000 / 2 = 5500

Average 2 Calculation:

First find the average:

1000 + 2000 + 3000 + 4000 + 5000 + 6000 = 21000

21000 / 6 = 3500

Get the percent multiplier:

50 / 100 = .5

Multiply the average calculation by the percent multiplier:

3500 * .5 = 1750

Since the condition is higher, add the above value to the average:

3500 + 1750 = 5250

Comparison:

Since 5500 > 5250, the condition is true.

Investigator also allows you to make sure that the volume on a particular bar is greater or less than a specific value. Simply click on the Volume Greater Than or Volume Less Than checkbox and enter in the desired value in the edit box.

Finally, Investigator also allows you to see if the average volume over a specified number of bars is greater or less than a specified value. For example, you can test to see if the average volume over the last 20 bars is greater than 1000000. This would eliminate financial instruments that are not heavily traded.