VOLUME WEIGHTED MACD V2 VWMACDV2 BY KIVANÇ fr3762

1 kwi 2018

Second version of Buff Dormeier's Volume Weighted MACD indicator....

Here in this version; Exponential Moving Averages used and Weighted by Volume instead of using only vwma ( Volume Weighted Moving Averages).
I personally asked Mr Dormeier, the developer of this indicator, and he confirmed this second version could be used.
I personally think that this one is more effective when comparing with the vwma version...


Volume Weighted MACD
Volume Weighted MACD (VW-MACD) was created by Buff Dormeier and described in his book Investing With Volume Analysis. It represents the convergence and divergence of volume-weighted price trends.

The inclusion of volume allows the VW-MACD to be generally more responsive and reliable than the traditional MACD .



What is MACD (Moving Average Convergence Divergence)?

Moving Average Convergence Divergence was created by Gerald Appel in 1979. Standard MACD plots the difference between a short term exponential average and a long term exponential average. When the difference (the MACD line) is positive and rising, it suggests prices trend is up. When the MACD line is negative, it suggests prices trend is down.

A smooth exponential average of this difference is calculated to form the MACD signal line. When the MACD line is above the MACD signal line, it illustrates that the momentum of MACD is rising. Likewise, when the MACD is below the MACD signal line, the momentum of the MACD falls. This difference between the MACD line and the MACD signal line is frequently plotted as a histogram to highlight the spread between the two lines.



What is the difference between MACD and VW-MACD?

Volume Weighted MACD is substituting the two exponential moving averages to compute the MACD difference with the two corresponding Volume-Weighted Moving Average . Thus, VW-MACD contrasts a volume-weighted short term trend from the volume-weighted longer term trend.

The signal line is left as an exponential moving average because VW-MACD line is already volume weighted.

Developer: Buff Dormeier @BuffDormeierWFA on twitter