Volume dependent moving average

A volume dependent moving average is a technical indicator to identify the trend and to generate buy and sell signals. A volume dependent moving average is a moving average where the share price on days with high volume is given more weight than share prices on days with lower volume.

A volume dependent moving average can be calculated for different time periods, a volume dependent moving average can be calculated for 10 days, 20 days or 200 days for example.

Volume Depending moving average (2 days): ((share price today) * (volume today) + (share price yesterday) * (volume yesterday)) / (volume today) + (volume yesterday)

A volume dependent moving average that is calculated for more days than another volume dependent moving average is less sensitive to stock price changes. A volume dependent moving average is calculated every day, a new share price and volume are added while the oldest quoute and volume are removed from the calculation. A volume dependent moving average can be used to generate buy and sell signals.

If one calculates a longer volume dependent moving average and a shorter volume dependent moving average, a buy signal or a sell signal is obtained when the shorter volume dependent moving average cuts through the longer volume dependent moving average. The trend can be identified by the direction of the volume dependent moving average.