VADER: Combining Price Displacement and Volume into Directional Energy
Summary
VADER is a technical indicator that combines bar-to-bar price movement with volume to estimate directional buying and selling pressure. It treats the price change relative to a recent bar range as displacement, scales that measure by a chosen volume calculation, and separates positive from negative contributions. Smoothed demand and supply measures are compared to produce a net directional ratio; a further smoothed series generates signals when it crosses zero. The indicator can optionally display a longer-term sentiment baseline and generate alerts when its signal crosses that baseline. Parameters control the lookback, smoothing, moving-average type, and whether volume is treated as relative, full, or omitted.
The document provides the indicator’s rationale and implementation, plus published BTC_USDT futures settings for hourly analysis over roughly one month in 2022. It reports no performance statistics or evidence that the signals predict returns. Its “energy” terminology is an analogy for price movement and volume, not a physical quantity, and volume scaling choices can change the readings. It is best understood as a descriptive market-pressure tool whose usefulness requires independent evaluation.
Key ideas
- VADER treats price change relative to a recent range as displacement and volume as a measure of effort.
- It separates positive and negative contributions, smooths them, and derives a net directional signal.
- Zero-line crossings and comparisons with an optional longer-term sentiment series can provide alerts.
- The indicator allows relative, full, or no volume scaling and several smoothing choices.
- The document offers no performance results, so predictive value remains unestablished.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.