InvestorQ : What is the approach to actually calculating the Volume adjusted Moving Average (VAMA)? # What is the approach to actually calculating the Volume adjusted Moving Average (VAMA)? Answer 2 years ago
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Firstly, you must calculate the average volume using every time period in the entire price series being studied (note that this means that the exact value of the moving average will vary depending on which periods you use).

Average Volume = Average of all Volume for the chart timeframe

Secondly, you must calculate the volume increment by multiplying the average volume by a factor of 0.67.

Volume Increment = Average Volume x 0.67

Thirdly calculate each period's volume ratio by dividing each period's actual volume by the volume increment.

Volume Ratio = Divide each bars Volume by the Volume Increment

Starting at the most recent time period and working backwards, multiply each period's price by the period's volume ratio and cumulatively sum these values until the user-specified number of volume increments is reached. Note that only a fraction of the last period's volume will likely be used.

Price x Volume Ratio = Multiply each bars Price by its respective Volume Ratio

Starting with the most recent bar on the chart and working backwards, sum each bars Price x Volume Ratio and each bars Volume Ratio until the summation of the Volume Ratio equals the period selected for the indicator.

VAMA = Cumulative Sum of Price x Volume Ratio / indicator period.
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