What is Relative Volume (RVOL) ?

In the fast-moving world of trading, finding the right moment to enter a stock can make a big difference.

One of the best clues that a big move is coming often hides in the trading volume. But not just any volume—relative volume, or RVOL.

Relative Volume is a powerful tool that can help traders spot breakouts before they happen.

Whether you're a beginner or someone looking to sharpen your strategy, understanding

RVOL could help you make more confident trading decisions.

Let’s take a closer look at what RVOL is, why it matters, and how you can use it to identify strong trading opportunities.

What is Relative Volume (RVOL)

The Simple Meaning of RVOL

Relative Volume compares the current trading volume of a stock to its average volume over a past period—often 10 or 20 days. It shows how active a stock is at a certain time, compared to what’s normal for that stock.

For example, if a stock usually trades 100,000 shares daily but suddenly trades 500,000 shares, the RVOL is 5. This means it’s trading at five times its normal volume, which could signal that something big is happening.

Why Relative Volume Matters

High RVOL often appears before or during a breakout. When traders and investors are suddenly more interested in a stock, the increase in volume usually reflects stronger buying or selling pressure. RVOL acts as a spotlight, pointing out which stocks are worth watching.

How RVOL is Calculated

The Formula Behind RVOL

The basic formula for Relative Volume is:

RVOL = Current Volume / Average Volume (for the same time period)

Many trading platforms calculate RVOL automatically, so you don’t need to do the math manually. Still, it’s helpful to know what’s going on behind the scenes.

Real-Life Example

Let’s say Stock A has an average volume of 200,000 shares by midday over the last 10 trading days. Today, by midday, it has already traded 600,000 shares. The RVOL would be:

600,000 / 200,000 = 3

This means Stock A is trading at 3 times its usual midday volume—a strong sign of unusual interest or a potential breakout.

How to Use RVOL to Spot Breakouts

Look for Sudden Volume Spikes

When RVOL suddenly jumps above 2 or 3, especially during the first hour of trading, it could signal a breakout is forming. This happens because more traders are entering the stock due to news, earnings, or other events.

Watch the Price Action Alongside RVOL

Volume alone is not enough. You also need to see how the price is behaving. A rising stock with high RVOL and strong price action (like breaking past resistance levels) is more likely to continue upward.

Use with Pre-Market or Opening Data

Sometimes RVOL is high even before the market opens. If a stock shows RVOL above 2 during pre-market hours and continues strong after the open, it could be a breakout candidate.

Key RVOL Levels to Watch

RVOL of 1: Normal volume, no special attention
RVOL between 1.5 and 2: Increased interest, worth monitoring
RVOL above 2: Strong activity, high chance of breakout
RVOL above 5: Extreme volume, often driven by big news or events

Keep in mind that higher RVOL does not always mean the stock will go up. It simply means more attention and stronger movement—up or down.

Combining RVOL with Other Tools

Use Support and Resistance Levels

If RVOL is high and the price breaks above a known resistance level, it adds strength to the move. Likewise, a high RVOL breakdown below support could signal a strong move downward.

Pair with Moving Averages

If a stock breaks above its 50-day moving average with RVOL above 2, it may be a strong buy signal. The moving average confirms the trend, and RVOL confirms the power behind it.

Add RSI or MACD for Confirmation

Indicators like the Relative Strength Index (RSI) or MACD can confirm whether the momentum is truly strong. If RVOL and RSI both show bullish signals, confidence in the trade grows.

Best Time to Use RVOL

Opening Hour of the Market

The first hour of trading often gives the clearest signs. If RVOL is high early in the day, the move has more time to develop and more traders to jump in.

During Earnings Season or News Events

Earnings reports or important company news often cause big changes in volume. Watching RVOL during these times helps you act early on significant moves.

RVOL in Different Market Types

Stocks

Most commonly used in stocks, RVOL helps identify where interest is rising beyond normal levels. This is helpful for day traders and swing traders.

Crypto and Forex

Though less common, some platforms offer RVOL for crypto and forex. The idea is the same—look for unusual activity to catch possible breakouts.

Mistakes to Avoid with RVOL

Ignoring Price Direction

High RVOL doesn’t mean buy. Always check the price trend and use chart patterns to confirm your decision.

Falling for Fake Breakouts

Sometimes stocks spike in volume but fail to hold the move. Wait for confirmation like a strong close above resistance or sustained buying over time.

Overusing RVOL Alone

Don’t rely only on RVOL. Combine it with other tools, patterns, and common sense for better results.

Creating a Simple RVOL-Based Strategy

Step 1: Screen for High RVOL Stocks

Use a stock screener to filter stocks with RVOL above 2 during the opening hour.

Step 2: Check for News or Events

Make sure the volume surge is supported by real reasons—like earnings, product launches, or upgrades.

Step 3: Analyze Price Patterns

Look for patterns like breakouts, flags, or cup and handle. Combine these with high RVOL for better timing.

Step 4: Set Entry and Exit Points

Decide where you will enter the trade and where to place stop loss. Stick to your plan and avoid chasing late moves.

Step 5: Track and Review

Keep a journal of your RVOL trades. Over time, this will help you improve and spot what works best for you.

Real Example of RVOL Spotting a Breakout

Imagine a stock, Titan Ltd, usually trades 1 million shares daily. Today, within the first hour, it already hits 2.5 million shares with rising price action and breaks above ₹2,800—its recent resistance.

With an RVOL above 2.5 and price breaking out with volume, this could be a high-probability trade. You enter at ₹2,805, set a stop loss at ₹2,770, and target ₹2,880. The trade hits the target the same day.

This is a clean example of RVOL pointing to a powerful breakout.

Final Thoughts:

Relative Volume is one of the simplest yet strongest tools in a trader’s toolkit. It helps you understand which stocks are attracting attention and where strong moves might begin. When combined with smart chart reading and other indicators, RVOL becomes even more effective. The next time you’re scanning the market, keep an eye on volume—but look deeper at Relative Volume. It might just point you to your next winning trade.

FAQs

What is a good RVOL for spotting breakouts

An RVOL above 2 is generally considered strong and may suggest that a breakout is forming.

Does high RVOL always mean the price will go up

No. High RVOL means strong interest, but the price can move in either direction. Always confirm with price action and trend.

How often should I check RVOL

Checking RVOL during the first hour of trading is most helpful, but it can be monitored throughout the day for ongoing setups.

Can RVOL be used for intraday trading

Yes, RVOL is great for intraday trading as it highlights stocks with sudden spikes in activity.

Is RVOL better than just watching volume

RVOL is more useful than regular volume because it puts the current volume in context compared to past activity.

Can beginners use RVOL

Yes, RVOL is beginner-friendly. With practice, even new traders can use it to find high-potential trades more easily