This is obviously correct:
Unfortunately my conclusions are that we can’t use volume alone.
I placed that market activity indicator you provide aside my prototype and standard MT4 volume – see pic. Looking at its algorithm, I don’t see the objective in this sort of weighing (I would tend to call it weighing instead of normalization).
Areas of high volume cannot be identified clearly, as I would expect. Maybe I have to think about it longer. And if this makes sense I would feel more comfortable with an algo relying on High and Close alone instead of Open and Close (see several gg53 posts).
If we assume a nearly constant tick rate over the lifetime of particular candle…
Thats a hard assumption!
… we could obtain better estimates of market activity
For higher timeframes, we could work with volume of M1, thus getting away from your previous assumption and looking at volume at a more detailed sample rate. And at bar zero, we might even code a tick counter independent of any fixed timeframe.
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A good trader is a realist who wants to grab a chunk from the body of a trend, leaving top- and bottom-fishing to people on an ego trip. (Dr. Alexander Elder)