What does normalized volume help traders determine?

Normalized volume is a crucial measurement for traders because it provides context for a stock's trading activity by comparing today's volume to its average volume over a specific look-back period. This comparison helps traders assess whether the current trading volume is above or below typical levels, allowing them to gauge the strength of market interest in the asset.

When volume is normalized, it can indicate potential breakouts or breakdowns—high normalized volume suggests that significant interest may lead to price movement, while low normalized volume could imply a lack of conviction in the market. By viewing volume as a percentage of average historical volume, traders can better understand the relative significance of current trading activity and make informed decisions based on that context.