Volume Price Trend is an indicator which uses the volume of the day to create an weighted value, i.e. it is a volume weighted price trend.
The formula for the VPT is as follows: The Sum of i=1 to n of (Close Price of i - Close price of previous period) * Volume
The result is an indicator with positive and negative values. If VPT is positive then buy long, if VPT is negative then sell the long position and buy short.
n is the value that needs to be optimized using backtesting software. The result was that for n=50, it produced quite good results, higher than other indicators which were back- tested in similar fashion.
Therefore, this indicator holds some importance and it may be a good indicator to use for the longer term. Because it is not a very popular indicator, it is not used quite often which gives it some injustice. More research is necessary to decide whether it holds promise to provide profit, or not. More tests necessary to be done for this indicator, until it is proven to be useful.
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The formula for the VPT is as follows: The Sum of i=1 to n of (Close Price of i - Close price of previous period) * Volume
The result is an indicator with positive and negative values. If VPT is positive then buy long, if VPT is negative then sell the long position and buy short.
n is the value that needs to be optimized using backtesting software. The result was that for n=50, it produced quite good results, higher than other indicators which were back- tested in similar fashion.
Therefore, this indicator holds some importance and it may be a good indicator to use for the longer term. Because it is not a very popular indicator, it is not used quite often which gives it some injustice. More research is necessary to decide whether it holds promise to provide profit, or not. More tests necessary to be done for this indicator, until it is proven to be useful.
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[I would request perhaps any readers who may find the topics discussed here as interesting, then they may want to contribute some money so I have available resources to write more topics. If you can submit a small payment for example to my paypal account email chrisk144@gmail.com then I can continue writing my blogs without delay, or hesitations because of my busy time/ schedule, or lack of resources. Thank you very much.]
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