Investor's wiki

Intraday Intensity Index

Intraday Intensity Index

What Is the Intraday Intensity Index?

The Intraday Intensity Index is a volume- based technical indicator that incorporates volume with a security's price. Traders can utilize the Intraday Intensity Index to follow how intraday highs and lows are moving with volume in comparison to the previous day's closing price.

Understanding the Intraday Intensity Index

The Intraday Intensity Index was developed by Dave Bostian. One of several indicators can be utilized to follow how volume is impacting a security's price. It gives a continuous volume-centered indicator by utilizing a security's latest close, high and low in its calculation while likewise considering in volume.

The Index level is derived from the following calculation:
Intraday Intensity Index=(Close×2)HighLow(HighLow)×Volumewhere:Close=Most recent closing priceHigh=Intraday high priceLow=Intraday low priceVolume=Number of shares sold intraday\begin &\text = \frac{ (\text \times 2) - \text - \text }{ (\text - \text) \times \text } \ &\textbf\ &\text = \text \ &\text = \text \ &\text = \text \ &\text = \text \ \end
The numerator deducts the security's high and low from two times the latest closing price. The denominator multiples volume times the difference between the security's high and low trading price. Overall, the security's intraday highs and lows become important factors driving the index's value when they move over the closing price with increased volume.

Generally, in the index's calculation, when the intraday highs and lows move over the closing price with volume, then the index will move strongly toward a negative area. Accordingly, the Intraday Intensity Index can be useful in recognizing massive changes in price brought about by volume. Since high volume is regularly driven by institutional trades, it can likewise be viewed as a means for following what institutional investment is meaning for price.

The Intraday Intensity Index is ordinarily accessible through advanced charting software. It is generally followed in a chart window below a candlestick chart. Frequently it will likewise be an overlay against volume. Numerous traders utilize the Intraday Intensity Index related to Bollinger Bands or other envelope channels, since substantial movement in the Intraday Intensity Index can assist with supporting trading plans around a security's resistance and support trendlines.

The Intraday Intensity Index is a rare example of famous indicators for following volume's effect on price. Other famous indicators incorporate the volume-weighted average price (VWAP), the Positive Volume Index and Negative Volume Index, and Chaiken's Money Flow.

Chaiken's Money Flow

Chaiken's Money Flow indicator utilizes the Intraday Intensity Index in its calculation. It follows the sum of the Intraday Intensity Index throughout a predetermined time span in comparison to the sum of volume. Its calculation is as follows:
Chaiken’s Money Flow=i=121Intraday Intensity Indexii=121Volumeiwhere:Numerator=Sum of 21 periods of Intraday Intensity IndexDenominator=Sum of 21 periods of total volume\begin &\text{Chaiken's Money Flow} = \frac{ \sum_{21} \texti }{ \sum{21} \text_i } \ &\textbf\ &\text = \text{Sum of 21 periods of Intraday Intensity Index} \ &\text = \text{Sum of 21 periods of total volume} \ \end

Highlights

  • The Intraday Intensity Index is utilized to follow what volume is meaning for a security's price.
  • The Intraday Intensity Index is frequently utilized with different indicators to support trading plans around a security's resistance and support trendlines.
  • For instance, when intraday highs and lows move over the closing price with volume, then the index will move strongly negative.
  • The index utilizes a security's latest close, high and low in its calculation while likewise considering in volume.