In China's stock market, the volume ratio is an indicator used to measure relative trading volume. It compares the average volume per minute after the market opens to the average volume per minute over the past five trading days.
2. Application of Volume Ratio:
When there is a sudden surge in volume, the volume ratio chart will show a sharp upward break, indicating an increase in trading volume (initial market movements can be disregarded). Conversely, when volume contracts, the volume ratio will move downward.
If the volume ratio is greater than 1, it indicates that the average trading volume per minute for the current day is higher than the average over the past five days, signifying increased trading activity. If the volume ratio is less than 1, it means that today's trading volume is lower than the average of the past five days, indicating decreased trading activity. 3. Volume Ratio Calculation:
The formula for calculating the volume ratio is:
Volume Ratio=Current Total Volume/(Average Volume per Minute over the Last 5 Days * Accumulated Market Open Time (in minutes))