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Module 04

Volume, relative volume, and float rotation

Price tells you what happened. Volume tells you whether to believe it. Rotation tells you who owns the stock now.

8 min read · module 04 of 09

If you had to delete every indicator and keep one input besides price, keep volume. It is the only thing on the chart that distinguishes a move with participation from a move without one.

Relative volume is the useful form

Raw volume is meaningless across names: 400k shares is enormous for one stock and nothing for another. Relative volume (RVOL) normalises it: today's volume against the same stock's typical volume for that time of day. RVOL of 20 means twenty times the usual participation, which is a statement about attention rather than price.

Compare against the same *minute of day*, not the daily average. A name that has traded its full daily average by 09:35 is not "at 1× RVOL" in any useful sense.

Float rotation

Session volume divided by float. A name that has traded 3.8× its float has turned over every available share nearly four times. That is not a liquidity statistic: it is a statement about ownership. Almost everyone holding at that point bought today, which means almost everyone holding is fast money with a short time horizon.

Under 0.5×EarlyOriginal holders still own it. Moves have supply to absorb them.
1× to 2×RotatingContinuation territory. Overhead supply is being cleared.
Above 3×Exhaustion riskEveryone holding is new. Nothing anchors the price on the way down.

The four combinations

Price rising while volume fallsNEW HIGH, NO BIDS
Each push makes a new high on fewer shares. Nothing is broken yet, but there is nobody left to pay up, and the flush comes two bars later.
PriceVolumeRead
UpRisingConfirmed. Participation is joining the move.
UpFallingSuspect. Fewer buyers each bar: the classic pre-fade signature.
DownRisingReal distribution, or a flush. Either way, it is not a quiet drift.
DownFallingA drift. Often the healthiest pullback shape in an uptrend.

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