Normalized Volume Z-Score

The Normalized Volume Z-Score indicator measures how unusual the current trading volume is compared to its recent history.
It calculates the z-score of volume over a user-defined lookback period (default: 50 bars), optionally using log-volume normalization.

A z-score tells you how many standard deviations today’s volume is away from its mean:

Z = 0 → volume is at its average.

Z > 0 → volume is higher than average.

Z < 0 → volume is lower than average.

Threshold lines (±2 by default) highlight extreme deviations, which often signal unusual market activity.

How to Trade with It

High positive Z-score (> +2):
Indicates abnormally high volume. This often happens during breakouts, strong trend continuations, or capitulation events.
→ Traders may look for confirmation from price action (e.g., breakout candle, strong trend bar) before entering a trade.

High negative Z-score (< –2):
Indicates unusually low volume. This may signal lack of interest, consolidation, or exhaustion.
→ Traders may avoid entering new positions during these periods or expect potential reversals once volume returns.

Cross back inside thresholds:
When z-score returns inside ±2 after an extreme spike, it may suggest that the abnormal activity has cooled down.

Tips

Works best when combined with price structure (support/resistance, demand/supply zones).

Can be applied to crypto, stocks, forex, futures – anywhere volume is meaningful.

Log normalization helps reduce distortion when some days have extremely large volumes.