Volume spike: relative activity and the denominator choice
The Volume spike template compares a candle’s volume with its rolling average.
Before this lesson
These lessons provide background; you can still read this page now.
What the indicator measures
The Volume spike template compares a candle’s volume with its rolling average. The ratio highlights unusual activity under that definition, not whether the activity was buying, selling or profitable to follow. It is also not automatically normalized for the time of day or for how much of the current candle has elapsed.
Calculation and units
The Studio formula is volume / SMA(volume, N), with default N=20 and a reference threshold of 2. The average includes the current candle. An implementation that averages only previous candles has a different denominator. Comparisons must identify that choice before treating two relative-volume figures as inconsistent.
Worked educational example
For nineteen candles of volume 100 and a current candle of 300, the inclusive twenty-bar average is 110, giving relative volume 2.7273. Dividing by the previous-only average would give 3 instead. The difference comes entirely from the denominator, not from an additional executed transaction.
Reading it without overclaiming
A spike near news or a session boundary can reflect a changing normal activity pattern. Partial candles can understate final volume; provider gaps can depress the baseline. A large ratio built on a tiny denominator is not necessarily substantial absolute activity. Review both the ratio and the underlying units.
How TradingHub implements it
The template is available through Indicator Studio as Volume spike, distinct from the native Volume checkbox. It allows period and threshold changes and plots a ratio histogram. With zero average the engine leaves the ratio undefined rather than dividing by zero. It does not perform a same-time-on-prior-days session comparison.
Comparisons that matter
Raw volume answers how much was reported, while this ratio answers how that figure compares with an inclusive recent average. OBV and MFI apply different price-signing rules. Use execution data to investigate aggressor direction rather than inferring it from a threshold crossing.
A reproducible chart review
Open the existing Trading chart and choose the same market, interval and closed observation time as your comparison. Record every calculation parameter before changing one at a time. Match source fields, history length and the bar window. Native indicators calculate from the supplied visible slice; Indicator Studio calculates from its available chart snapshot. A difference after panning may therefore be a window or warmup effect rather than a new market event.
Limits and next lesson
The illustration uses constructed candles, not a dated market observation or a backtest. A live candle can change until it closes. Missing history, volume units and implementation conventions limit comparisons. No indicator guarantees a direction, an execution price or protection from loss. Use the related lessons to separate definitions, observed values and possible explanations; a correct quiz records learning progress, not trading competence.
Knowledge check
Does the Studio Volume spike denominator include the current candle?
- Yes; it is the inclusive rolling SMA of volume
- No; it always uses previous days at the same time
- No; it is the total volume across all exchanges
Show explanation
The template divides current volume by ta.sma(volume, period), which includes the current supplied observation.
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Primary sources and scope
Educational scenarios are not execution guarantees, forecasts or personal recommendations. Check current product rules at their source.
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