Description

• Developed by Dick Arms, VAMA, as its name suggests, considers volume as the weighting factor
• It gives more weight to price on days with higher volume

Interpretation

• Similar to other averages, VAMA is also used for confirming trends and overall price direction
• The price line moving above the VAMA indicates an uptrend suitable for Buy trades
• The price line moving below the VAMA indicates an downtrend suitable for Sell trades

Default Parameters Used/Inputs

• Data line- Close line, High line, Open line, Low line or others
• Quantity line- volume
• Bars – number of bars for which VAMA has to be calculated

Returns/Output

VAMA graph line reflecting emphasis volume-related changes

Formula

VAMA = (∑ 1^n(Price*Volume) )/(∑1^nVolume)
Where n is the number of specified bars