medium · Volume Spread Analysis effort-vs-result-spread
Why is 'Relative Volume' used instead of 'Absolute Volume' in professional VSA analysis?
- Absolute volume is treated as a tightly guarded secret that only registered market-makers can ever access.
- A high-volume reading for one stock might be a low-volume reading for another depending on its average liquidity.
- Absolute volume readings are often thought to be distorted by the standard ninety-minute exchange reporting delay.
- Using relative volume instead simply allows for a much easier calculation of the standard Close Position formula overall.
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