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# Volume - absolute and relative

Discussion in 'Trading' started by Grant, Nov 25, 2007.

1. ### Grant

Please look at the figures below.

A)
Bid volume = 2000

B)
Bid volume = 4000

Both ratios are equal but the volume for B) is double that in A). How could I distinguish the two in terms of a ratio or an alternative?

Thank you.

Grant.

Does your answer have to have a result with only one parameter?

Another possibility is to take the log of each number, then look at the ratio of logs.

1) log bid/log ask = 1.100343
2) log bid/log ask = 1.091193

You get a 10% incremental gain for each doubling that happens relative to 1,000 shares bid. But if the reference is no longer 1,000, the gain will drop proportionally.

i.e. 1000/2000 = 10%
2000/4000 = 9.12%
3000/6000 = 8.66%

or 1000/4000 = 20% (doubled twice)
2000/8000 -= 18.24%
3000/12,0000 = 17.31%
4000/15,000 = 16.71%

notice this tell you about doubling magnitudes and gives you an incremental difference the magnitude of the original quantities moves up.

3. ### Grant

Thank you for the reply. Being mathematically backward this was a difficult one for me.

As you pointed out the problem will be if the reference itâs constantly changing, which it is.

However, I reckon Iâve found a solution:

Originally

A)
Bid volume = 2000

Solution
Bid vol = 2000
log(2000) = 3.301
log(3.301) = 0.519

log(1000) = 3.000
log(3.000) = 0.477
0.519 + 0.477 = 0.996

B)
Bid vol = 4000