Normalized Volume

OVERVIEW
The Normalized Volume (NV) is an attempt at visualizing volume in a format that is more understandable by placing the values on a scale of 0 to 100. 0 in this case is the lowest volume candle available on the chart, and 100 being the highest. Calling a candle “high volume” can be misleading without having something to compare to. For example, in scaling the volume this way we can clearly see that a given candle had 80% of the peak volume or 20%, and gauge the validity of price moves more accurately.

FEATURES
NV by session

• Allows user to filter the volume values across 4 different sessions. This can add context to the volume output, because what it high volume during London session may not be high volume relative to New York session.
  

Overlay plotting

• When volume boxes are turned on, this will allow you to toggle how they are plotted.
  

Color theme

• A standard color theme will color the NV based on if the respective candle closed green or red. Selecting variables will color the NV plot based on which range the value falls within.
  

Session inputs

• Activated with the “By session?” Input. Allows user to break the day up into 4 sessions to more accurately gauge volume relative to time of day.
  

Show Box (X)

• Toggles on chart boxes on and off.
  

Show historical boxes

• Will plot prior occurrences of selected volume boxes, deleting them when price fully moves through them in the opposite direction of the initial candle.
  

Color inputs

• Allows for intensive customization in how this tool appears visually.
  

INTERPRETATION
There are 6 pre-defined ranges that NV can fall within.
NV <= 10

• Volume is insignificant
  
• In this range, volume should not be a confirmation in your trading strategy.
  

NV > 10 and <= 20

• Volume is low
  
• In this range, volume should not be a confirmation in your trading strategy.
  

NV > 20 and <= 40

• Volume is fair
  
• In this range, volume should not be the primary confirmation in your trading strategy.
  

NV > 40 and <= 60

• Volume is high
  
• In this range, volume can be the primary confirmation in your trading strategy.
  

NV > 60 and <= 80

• Volume is very high
  
• In this range, volume can be the primary confirmation in your trading strategy.
  

NV > 80

• Volume is extreme
  
• In this range, volume is likely news driven and caution should be taken. High price volatility possible.
  

To utilize this tool in conjunction with your current strategy, follow the range explanations above section in this section. The higher the NV value, the stronger you can feel about your directional confirmation.
If NV = 100, this means that the highest volume candle occurred up to that point on your selected timeframe. All future data points will be weighed off of this value.

LIMITATIONS

• This tool will not load on tickers that do not have volume data, such as VIX.
  

STRATEGY

1. The Normalized Volume plot can be used in exactly the same way as you would normally utilize volume in your trading strategy. All we are doing is weighing the volume relative to itself.
   
2. Volume boxes can be used as targets to be filled in a similar way to commonly used “fair value gap” strategies. To utilize this strategy, I recommend selecting “Plot to Wicks” in Overlay Plotting and toggling on Show Historical Boxes.
   
3. Volume boxes can be used as areas for entry in a similar way to commonly used “order block” strategies. To utilize this strategy, I recommend selecting “Open To Close” in Overlay Plotting.
   

NOTES

1. You are able to plot an info label on right side of NV plot using the "Toggle box label" input. When a box is toggled on this label will tell you when the most recent box of that intensity occurred.
   
2. This tool is deeply visually customizable, with the ability to adjust line width for plotted boxes, all colors on both box overlays, and all colors on NV panel. Customize it to your liking!
   
3. I have a handful of additional features that I plan on adding to this tool in future updates. If there is anything you would like to see added, any bugs you identify, or any strategies you encounter with this tool, I would love to hear from you!
   

Huge shoutout to joebaus for assisting in bringing this tool to life, please check out his work here on TradingView!