Intraday Intensity Indicator – 2021 Essential Tutorial

In this post, we will take a look at the Intraday Intensity Indicator. The indicator is a highly advanced trading tool that can help you make better decisions in your trades. We’ll go over what it does and how to use it properly.

You’ll learn how to use this indicator and why it’s vital to have a good perspective on the market.
We’ll also take you through the place to find the Intraday Intensity Indicator, such as on TradingView, or you may download it for free in our version for TradeStation or MultiCharts.

Intraday Intensity Indicator on Tradingview to analyze Netflix stock

Indicators that utilize volumes are rather sophisticated tools, but they require a good data feed. Volume data may not be available at all times, and when it is, it might be unreliable. For example, we will not advise you to use this indicator on MetaTrader because the volume data is entirely unpredictable.

The best platform on which to utilize this indicator is, for example, InteractiveBrokers, which provides a fantastic data feed. TradingView also has a decent data feed for free and offers an excellent data feed.

What is the Intraday Intensity Indicator? 

The Intraday Intensity Index is a technical indicator that integrates volume with the price of an asset. Traders can use this index to see how intraday highs and lows are moving compared to yesterday’s closing prices, providing insight into market sentiment for today’s trading sessions.

The Intraday Intensity Index Indicator measures volume according to the closure position within the variation between the minimum and maximum of the session.

Intraday Intensity Index is a way to spot significant changes in prices caused by volume. Because institutional trading frequently drives high volumes, it can also be used to indicate what’s going on with markets and where there might be some opportunities if you know how these things work!

What’s the Difference Between an Intraday Intensity Indicator and an On Balance Volume Indicator?

David Bostian developed it; this indicator, when included in a daily graph, can be seen as providing different information on price trends compared to other indicators such as the On Balance Volume Indicator.

The Intraday Intensity Indicator seeks to solve the significant simplification brought about by the On Balance Volume Indicator in attributing volumes entirely upwards or downwards according to the closing level compared to the previous closing.

on balance volume and intraday intensity difference on microsoft chart

The On Balance Volume (OBV) is a cumulative indicator that measures buying and selling pressure as a whole, adding volume on up days and subtracting volume on down days.

When the security closes higher than its prior close, all of the day’s volume is recorded as up-volume. When the stock price falls below its previous close, it is said that there was a down-volume.

A new way to see market sentiment

David Bostian’s indicator starts from an assumption: the preponderance of upward or downward forces will determine the position of the closure within the range between minimum and maximum.

It will then be determined:

  • a predominance of bullish forces will push the closure towards maximum seating
  • a predominance of downward forces pushing the closure towards the seating minima
  • an interlocutory session, without particular imbalances, will tend to have closure in an intermediate area of ​the range.

The underlying assumption of the Intraday Intensity Indicator is correct, but it is also affected by a simplification: the course of a session can be influenced by different phases.

In which the upward and downward functions can alternately take over.

It is unknown which fronts the most significant volumes are generated in a single daily bar, while the closing level could result from the final movement achieved with lower volumes.

However, with the technical analysis of the Intraday Intensity Indicator, we are closer to reality than with the On Balance Volume Indicator.

Intraday Intensity Index Indicator calculation formula

The standard and standardized versions of the Intraday Intensity Index formula are as follows:

Standard version

((2C-H-L)/(H-L))xV

Where: C = Closing price; H = Maximum of the session; L = Minimum of the session; V = Volumes exchanged in the session.

This portion of the formula:

 2 x C – H – L

achieves the purpose of identifying the closing level, purging it of the upper and lower limit determined by the maximum and minimum seating;

while the denominator portion:

H/L

serves to relate the closure within the variation between maximum and minimum. The result will then be multiplied by the volumes.

It will equal +1 when the closing is equal to the maximum and then add the volumes.

It will be -1 when the closing is equal to the minimum and then subtract the volumes.

It will be 0 when the close is in the middle of the range and will therefore disregard volumes.

Other nuances can also occur naturally:

  • a 75% closure of the range will add 50% of the volumes
  • a 25% closure of the range will subtract 50% of the volumes

we will then build the Intraday Intensity Index at 21 days or with a different time window depending on the needs of each analyst.

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Normalized version

There is also the normalized version of this indicator, which is obtained by dividing it by the sum of volumes and then multiplying x 100; the result at this point will be an oscillator that assumes values ​ ​between +100 and -100.

The formula for the standard 21-period indicator is:

IInorm = (IIstd / S21 V) x 100

In this case, it may be useful to display the normalized indicator as a histogram.

How to use the Intraday Intensity Index Indicator

The Intraday Intensity indicator is used to detect divergences:

  • whether downward and upward prices are likely to reverse downward
  • whether rising and falling prices are likely to reverse upwards
  • if it agrees with the prices confirms the trend
intraday-intensity-indicator-TradeStation-MultiCharts-Divergence

The functioning of the differences in volumes is different from those examined on prices, for example, in the Momentum index, where we measured the rate of price rise or fall.

Differences in volumes are based on the fact that volumes also tend to decrease in the phases of trend exhaustion, confirming the low conviction.

The best platforms for using the indicator

The Intraday Intensity Indicator is available on various trading platforms, including MetaTrader, TradeStation, MultiCharts, and others.

On the other hand, the data feed is precious, and not all platforms are appropriate for extracting it. The MetaTrader, for example, has an inadequate data feed, which makes this indicator ineffective.

The best platforms for utilizing the Intraday Intensity indicator are presented below. We’ll also show you how to create your custom indicator.

Intraday Intensity on TradingView

Some trading platforms might provide the indicator. However, we recommend that you use TradingView instead.

We have selected the best intraday indicator for the TradingView platform. If you are trading stocks, ETFs, or forex on their site, this is a great way to see all significant markets with a detailed chart in real-time!

intraday intensity indicator nvidia chart to spot trend

You can also set alerts that notify when prices hit particular levels, so it’s easy not to miss any opportunities around the corner.

The data supplied by the platform is the finest in the industry, and it’s available for free. With this indicator and more trading, you’ll be able to analyze thousands of financial instruments. Here are a couple of examples.

You can also use InteractiveBorkers

Intraday intensity indicators work well on Interactive Brokers. Even if Interactive Brokers isn’t known for employing cutting-edge graphical indicators, we think it is one of the most trustworthy brokers in the world.

Interactive broker’s technical analysis tools aren’t as effective as TradingView, but it offers a decent data feed.

Create your own TradeStation or MultiCharts indicator

Finally, we highlight the Intraday Intensity Indicator for TradeStation and the Intraday Intensity Indicator for MultiCharts.

Vars:
Intraday_Intensity(0),
Intraday_Intensity_Index(0);

Intraday_Intensity = ( (Close * 2) – High – Low ) / ( ( High – Low ) * Volume );

Intraday_Intensity_Index = summation(Intraday_Intensity, 21);

Plot1 ( Intraday_Intensity_Index, “III”, White);

Conclusion

Generally, we like the volume-based indicator. For example, we developed the Chaikin Money Flow in this article.

Volume indicators should give you a better perspective. Through using them, you can discover what knowledgeable financial professionals are doing.

We created the Intraday Intensity Indicator to overcome the limitations of other volumes indicators.

Unfortunately, the Intraday Intensity Indicator examines only the end-of-day volumes. We cannot determine from this indicator what intraday movement has been supported by high volume.

To sum up, we rarely use this indicator, and we never use it alone.

There are other volume-based indicators: VWAP, Positive and Negative Volume Indexes, On Balance Volume, and Chaiken’s Money Flow.

You can learn more about this indicator, reading these resources:

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