Volume-Weighted Directional Energy Indicator for Demand and Supply Pressure

Summary

The Volume Accelerated Directional Energy Ratio combines normalized price direction with volume to estimate the strength of buying and selling pressure. Price change is scaled by a recent high-low range and bounded, then multiplied by volume in one of three modes: no volume weighting, relative volume, or raw volume. Positive and negative energy are separated, smoothed into demand and supply lines, and their difference forms the main net-energy line. A histogram tracks the changing balance as sentiment momentum.

The indicator exposes settings for lookback, smoothing, moving-average type, volume mode, and histogram display. Positive net energy is interpreted as demand dominance and negative energy as supply dominance; the histogram is intended to show whether the imbalance is strengthening or fading. The document supplies calculation details and code but no empirical evaluation, entry or exit rules, or evidence that the signals predict returns. The measure’s behavior depends on normalization, smoothing, and volume-data quality, so it should be assessed for the instrument and timeframe where it is applied.

Key ideas

• The indicator weights bounded, range-normalized price direction by an adjustable volume measure.
• It separates positive and negative energy into smoothed demand and supply series.
• The difference between demand and supply produces the main net-energy reading.
• A histogram represents whether the energy imbalance is gaining or losing strength.
• The document explains construction but provides no tested trading rules or performance results.

Tags

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