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Up/Down Volume Ratio Indicator for ThinkorSwim

The Up/Down Volume Ratio for ThinkorSwim sheds light on the stock’s buying and selling pressure based on its volume.

This helps you determine whether there has been a change in market sentiment for a particular stock.

The idea originally came from Investors.com. The formula is as follows:

A 50-day ratio that is derived by dividing total volume on up days by the total volume on down days. A ratio greater than 1.0 implies positive demand for a stock.

Investors and traders can use the indicator to find stocks under accumulation.

Up/Down Volume Ratio for ThinkorSwim

#Indicator Name: Up/Down Volume Ratio
#Version: 1.0.0
#Developer: Melvin C.
#URL: https://thinkscript101.com/up-down-volume-ratio-indicator-thinkorswim/
declare lower;
input length = 50;
def upVolume = if close > close[1] then volume else 0;
def downVolume = if close < close[1] then volume else 0;
def totalUp = Sum(upVolume, length);
def totalDown = Sum(downVolume, length);
def VolumeRatio = totalUp / totalDown;
plot data = VolumeRatio;
plot level_1 = 1;
plot level_2 = 2;

How to Use

When volume is increasing and there are signs of institutional buying, that’s a good time to trade.

Large orders placed in the market by institutional investors like hedge funds and mutual funds frequently have a substantial impact on volume and price when they are executed.

The Up/Down Volume Ratio aids in finding stocks with strong buying demand.

Import the source code above and add it to your ThinkorSwim chart.

  • Volume ratio below 1 = selling pressure
  • Volume ratio above 1 = buying pressure
  • Volume ratio above 2 = significant buying pressure

This indicator is insufficient on its own. Use it in addition to technical analysis and fundamental analysis.

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