MACD - Volume Weighted

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

The use of volume makes the VM-MACD more sensitive and reliable than the traditional MACD.

When calculating the MACD difference, the Volume Weighted MACD replaces two exponential moving averages with two corresponding volume weighted moving averages. Thus, the VW-MACD separates a volume weighted short-term trend from a volume weighted long-term trend.

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

The indicator view in the chart.

Image 37169

The indicator has the following parameters:

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Settings

Period - setting of the indicator value smoothing period.

Short Period - setting of the MACD short period.

Long Period - setting of the MACD long period.

Common

Source - setting of the indicator calculation parameters:

  • Open
  • High
  • Low
  • Close
  • Volume

Drawing

Panel/Moving average period - selection of the indicator location in the chart:

  • New panel
  • Chart

Moving average convergence/divergence, Signal

Show value - display of the indicator value on the price scale on the left.

Scale/Auto-scaling - if this option is on, the scale will be automatically calculated, based on the minimum and maximum indicator values, so that the indicator would fit in the chart.

Color - color setting of the indicator.

Visual type - visual setting of the indicator display in the chart:

  • Line
  • Histogram
  • Hash
  • Block
  • Cross
  • Square
  • Dots
  • Up arrow
  • Down arrow
  • Axis label
  • Hide

Line style - setting of the line display style:

  • Solid
  • Dash
  • Dash - dot
  • Dash - dot - dot

Width - setting of the indicator line width.

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