Moving Average weighted by Volatility (VAMA)

Name Type Prerequisite Use Cases
MA Weighted by Volatility (V-WMA) Trend/Volatility StdDev Stays closer to price during breakouts and ignores "chop."

Definition

Volatility Adaptive Moving Average (VAMA) adapts its smoothing period based on the volatility of the price. When volatility is high, it can react faster (or slower depending on design), effectively filtering out noise during consolidation while catching trends.

Special cases

  • Maximum possible value: Unbounded
  • Minimum possible value: 0
  • Behavior: Follows the price, weighting the moving average by trading volume.

Trading Significance

  1. Adaptability: Reduces lag during trends and avoids whipsaws during sideways markets better than static MAs.