VITAMIN: Volume Insight Trend Analyzer - Multilayered INdicator)

3월 18일

Meet VITAMIN, an indicator created mainly to function as a confirmation volume indicator to integrate into strategies as a signal filter, but it can also be used as a general-purpose indicator to enhance market analysis through volume trend insights.

The name was choses to help with recall, with VITAMIN short for "Volume Insight Trend Analyzer - Multilayered INdicator".

The indicator is grounded in the net volume calculation, using TradingView's built-in Net Volume indicator as a starting point, and taking as a series of simple Moving Averages based on the Net Volume data.

Core Features:

Multilayered Analysis: VITAMIN layers multiple moving averages on top of net volume—volume adjusted for price movement direction—to filter market noise and reveal clearer volume trends.

Foundation in Net Volume: The starting point is net volume, which combines volume magnitude with the direction of price changes, offering a baseline for momentum analysis.

Visual Trend Indicators: The indicator uses green and red shading between its moving average layers and a reference zero line to visually denote bullish (green) and bearish (red) volume trends, simplifying the interpretation of market sentiment.

Utility of VITAMIN:

Volume plays a crucial role in market analysis, but interpreting volume directly can be complex due to inherent market noise. Net Volume in particular features a great deal of noise, as a sequence of spikes and dips from bar to bar. My purpose with this indicator was to separate the signal from the noise. VITAMIN's multilayered moving averages provide a smoother, more interpretable trend line that distinguishes significant market moves from short-term fluctuations.

Applications:

Confirming Trends: VITAMIN can help validate price trends. A price uptrend paired with a bullish volume trend indicated by VITAMIN may reinforce the strength of the movement.

Identifying Divergences: Observing discrepancies between price trends and VITAMIN's volume trends can highlight potential reversals or continuations.

Assessing Market Sentiment: The overall trend and colour shading within VITAMIN aims to provide insight into market sentiment.

VITAMIN is designed for simplicity and effectiveness, aiming to provide deeper insights into volume trends, supporting more informed decisions.

Like any indicator featuring moving averages, and averages of those averages, there is a built-in lag to this indicator, but this is the trade-off for removing noise from the signal. Adjust the user inputs to suit your time frame.