Volumatrix

2021년 7월 19일

Volumatrix is an enhanced volume weighted price indicator with advanced features

Created by CryptoJew & CryptoTiger on 04-06-2021

👋 Definition
Volumatrix turns current and historical price data into enhanced volume weighted price plots that allow you to visually grasp the momentum of any given market.
It’s easy to use and provides an accurate reading about an ongoing trend. This indicator is optimized to catch trend movements as soon as possible and to maximize certainty.

🙌 Overview
The Volumatrix indicator is based on an enhanced VWAP calculation, which serves as a present and upcoming price movement indication.
The further away the VWAP Wave is from the Zero Line, the more powerful the momentum is in that direction.
Conversely, the closer the VWAP Wave is to the Zero Line, the less momentum it has.

⭐️ Features
Volumatrix consists of the following features:

• VWAP Waves: Visualizes the market's momentum in an easy-to-understand way by drawing colored waves.
  
• VWAP Average: Acts as a calibration line for current wave movements.
  
• Bearish & Bullish Dots: Indicates and confirms immediate trend changes by printing dual-colored dots.
  
• EMA Backgrounds: Shows the general direction of the market, based on the exponential moving average (EMA).
  
• In-depth alerts: Help traders discover potential trades with less time.
  

☝️ Basics
The Volume Weighted Average Price plays an essential role, as the Volumatrix indicator uses an enhanced VWAP calculation.

The volume weighted average price (VWAP) is a great technical trading indicator used by traders as it accounts for both price and volume.
VWAP signals the ratio of the cumulative share price to the cumulative volume traded over a given time.
It is essential because it provides traders with advanced insight into the trend and value of an asset.
Unlike moving averages, VWAP assigns more weight to price points with high volume.
This allows one to understand price points of interest, gauge relative strength, and identify prime entries/exits.

VWAP works with any interval: seconds, minutes, hours, days, weeks, months, years, etc...

However, keep in mind that VWAP can also experience some lag, much like a moving average.
Lag is inherent in the indicator because it's a calculation of an average using past data.

🧮 Calculation
Volume Weighted Average Price (VWAP) is constructed with two parameters, namely, price and volume, in 5 steps:

1. Calculate the Typical Price for the period.
((High + Low + Close)/3)

2. Multiply the Typical Price by the period Volume
(Typical Price x Volume)

3. Create a Cumulative Total of Typical Price
Cumulative(Typical Price x Volume)

4. Create a Cumulative Total of Volume
Cumulative(Volume)

5. Divide the Cumulative Totals
VWAP = Cumulative(Typical Price x Volume) / Cumulative(Volume)


🔍 Trend Identification - What to look for
VWAP is an excellent way to identify the trend of a market.
When using Volumatrix, you are looking for multiple confirmations that take place simultaneously.
The more confirmations that occur at the same time; the more certain the indicator will be.
You can identify the direction of a market by looking out for a few critical confirming signals.

📈 Bullish Trend Confirmations:

VWAP Wave overcrossing Zero Line :
When the VWAP Wave is crossing over the Zero Line, it indicates an immediate bullish trend.
This is one of the most certain moves that one can detect in Volumatrix.
This means that the price is about to change direction.
This is the case for any timeframe: seconds, minutes, hours, days, week, month, year, etc.

VWAP Wave color turning bullish:
When a bullish trend is about to happen, the VWAP Wave will change its color to yellow and finally to green.
That way, one can preemptively detect an upcoming bullish move.
In general, the VWAP Wave can change to 3 different colors.
Green means bullish.

Bullish Dots:
From time to time, bullish green dots will appear.
When combined with other indications, the Bullish Dots can be handy in confirming an upcoming or present uptrend.
That said, one should never solely rely on dots when deciding whether the trend is bullish or not.
Instead, if a trader sees a green dot, it should be taken as a hint to look for further bullish indications.

EMA Background:
One can identify the general trend of a market by looking at the background color of the indicator.
When the background is green, one can assume that a bullish trend is present.
The background color changes based on the exponential moving average (EMA).
By default, the 200 EMA is set. Change this value based on your timeframe preferences.

VWAP Average:
When the white VWAP Average line crosses above the Zero Line, it acts as an additional trend confirmation when combined with the VWAP waves.
As the VWAP average does not weigh in the short-term movements too heavily, it is less affected by immediate volatility.
Therefore, traders usually use the VWAP Average as a calibration tool to interpret the VWAP Waves more precisely.

📉 Bearish Trend Confirmations:

VWAP Wave under crossing Zero Line:
When the VWAP Wave is crossing under the Zero Line, it indicates an immediate bearish trend.
This is one of the most certain moves that one can detect in Volumatrix. This means that the price is about to change direction.
This is the case for any timeframe: seconds, minutes, hours, days, week, month, year, etc.

VWAP Wave turning bearish:
When a bearish trend is about to happen, the VWAP Wave will change its color to yellow and then finally to red.
That way, one can preemptively detect an upcoming bearish move. In general, the VWAP Wave can change to 3 different colors.
Red means bearish.

Bearish Dots:
From time to time, bearish red dots will appear.
When combined with other indications, the bearish dots can be handy in confirming an upcoming or present downtrend.
That said, one should never solely rely on dots when deciding whether the trend is bearish or not.
Instead, if a trader sees a red dot, it should be taken as a hint to look for further bearish indications.

EMA Background:
One can identify the general trend of a market by looking at the background color of the indicator.
When the background is red, one can assume that a bearish trend is present.
The background color changes based on the exponential moving average (EMA).
By default, the 200 EMA is set. Change this value based on your timeframe preferences.

VWAP Average:
When the white VWAP Average line crosses below the Zero Line, it acts as an additional trend confirmation if combined with the VWAP waves.
As the VWAP average does not weigh in the short-term movements too heavily, it is less affected by immediate volatility.
Therefore, traders usually use the VWAP Average as a calibration tool to interpret the VWAP Waves more precisely.

💤 Sideways Trend Confirmations:

VWAP Average:
When the VWAP Average is parallel and hovering around the Zero Line, either above or below it, that will indicate a sideways trend.


🚦 Usage - How and where to use it
The Volumatrix indicator is a universal indicator that works with any market capable of calculating a VWAP.
It’s currently being used in the following markets: cryptocurrency market, stock market, gold market and oil (just to name a few).

❗️ Requirements:
This indicator does not require any additional indicators as traders usually do in price action trading.
Basically, one just needs to follow the crossings, dots, and colors to get maximum certainty.
As a bonus, we recommend traders take advantage of TradingView’s multi-chart to catch more simultaneous confirmations.

🗣 Example Strategy: The 4 Timeframe Strategy
One can use the Volumatrix indicator along with the 4 timeframe strategy.
For example, open the 4 hour, 1 hour, 30 minute, and 5minute intervals simultaneously from left to right in a multi-chart layout.
Then lookout for the following conditions to meet:

OPEN LONG TRADE IF: On the 1-hour interval + 30-minute interval, Bullish Dots appear simultaneously
AND: On the 4-hour interval, the VWAP Wave is above the Zero Line
AND: On the 5-minute interval VWAP Wave is about to cross over the Zero Line or has already minimally crossed up.

OPEN SHORT TRADE IF: On the 1-hour interval + 30-minute interval, Bearish Dots appear simultaneously
AND: On the 4-hour interval VWAP Wave is below the Zero Line
AND: On the 5-minute interval VWAP Wave is about to cross under the Zero Line or has already minimally crossed down.

💡 Tips

• Use TradingView’s 4-multi-chart layout to catch potential trades faster.
  
• Use the indicator on a computer for optimal performance.
  
• Set your computer screen to higher resolutions to get a better overview.
  

🔔 Alerts
With Volumatrix, you can use in-depth alerts like:

Bullish Dot
When a green dot at the bottom of the indicator appears

Bearish Dot
When a red dot at the bottom of the indicator appears

VWAP Wave Crossing Over Zero Line
When the VWAP Wave crosses over the Zero Line

VWAP Wave Crossing Under Zero Line
When the VWAP Wave crosses under the Zero Line

VWAP Wave Crossing Over Zero Line + Bullish Dot
When the VWAP Wave crosses over the Zero Line and a Bullish Dot appears

VWAP Wave Crossing Under Zero Line + Bearish Dot
When the VWAP Wave crosses over the Zero Line and a Bearish Dot appears

VWAP Average Crossing Over Zero Line
When the VWAP Average crosses over the Zero Line

VWAP Average Crossing Under Zero Line
When the VWAP Average crosses under the Zero Line


🔧 Settings

🔢 Inputs
These settings will change the behavior and outcome of the indicator.

EMA
Determines the number of previous candles that should be taken into calculation for the EMA background.
The value of the EMA can be changed to one's preferred value in accordance with the chosen interval.
The default value is 200.

🎨 Style
These settings will change the appearance of the indicator

VWAP Waves
Determines the color, opacity, thickness, and shape for the VWAP Waves.
The default shape is area.
The default colors are red, yellow & green.

VWAP Average
Determines the color, opacity, thickness, and shape for the VWAP Average.
The default shape is line.
The default color is white.

Zero Line
Determines the color, opacity, thickness, and shape for the Zero Line.
The default shape is a line.
The default color is white.

EMA Background
Determines the color & opacity for the Dynamic Background.
The default colors are black, red & green.

Bullish Dot
Determines the color, shape, opacity & location for the bullish dot.
The default shape is a circle.
The default color is green.

Bearish Dot
Determines the color, shape, opacity & location for the bearish dot.
The default shape is a circle.
The default color is red.


✅ Summary
Volumatrix is a unique indicator because, unlike many other VWAP tools, it's suited for simple as well as advanced analysis.
It’s a solid tool for immediately identifying the underlying trend of an asset.
Of course, this is true for any indicator based on the VWAP, which calculates an average using past data.
Still, Volumatrix is superior in this realm as it enhances the VWAP in its calculation and its visualization, while it comes with many advanced features.

❓ Questions
If you have any questions, just ask them here or in the Volumatrix community.


📚 Terminology

• Bearish Dots: Red dots appearing at the bottom of the Volumatrix indicator.
  
• Bullish Dots: Green dots appearing at the bottom of the Volumatrix indicator.
  
• EMA: Exponential Moving Average - Tracks the price of an asset over time while giving more importance to recent price data.
  
• Volume: A measure of how much of a given asset has traded in a period.
  
• VWAP: Volume Weighted Average Price - The ratio of the value traded to total volume traded over time.
  
• VWAP Average: Represents the average of the VWAP waves in the Volumatrix indicator.
  
• VWAP Wave: The colorful waves representing the enhanced VWAP in the Volumatrix indicator.
  
• Zero Line: It’s the indicator’s baseline and determines the beginning and end of a certain trend.
  

🙏 Acknowledgments
First, we would like to thank TradingView & PineCoders for this fantastic platform and technology.
We are also very grateful to our loyal trading community for constantly supporting our efforts.
We are looking forward to continuously improving this indicator for you.