Using Standard Deviation to Show Volume-Weighted Moving-Average Trend Strength

Summary

The document describes a technical indicator that combines a volume-weighted moving average with a standard-deviation-based measure of trend strength. It uses two configurable thresholds, dK1 and dK2, to determine the size of a colored dot displayed on the moving average. The dot color indicates the current trend direction, while its size distinguishes moderate from stronger readings. No dot represents the weakest level; a small dot represents medium strength, and a larger dot represents strong strength.

The page identifies the indicator as an MQL5 implementation and notes that it relies on a separate smoothing library. It explains the visual encoding and threshold concept, but supplies no performance tests, signals for entries or exits, or guidance for choosing parameter values. Standard deviation and volume weighting alone do not establish predictive value, so the indicator's usefulness would need to be assessed for the intended market and timeframe, including the effects of smoothing and parameter choices.

Key ideas

• The indicator applies standard-deviation thresholds to a volume-weighted moving average.
• Dot color represents trend direction, while dot size represents strength.
• No dot, a small dot, and a larger dot encode weak, medium, and strong readings.
• The implementation depends on an additional smoothing library.
• The document gives no evidence that the indicator predicts returns or guidance for tuning its thresholds.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.