[sylence175] Alpha Volume Flow
Description
The Volume Flow Indicator (VFI) was originally introduced by Markos Katsanos in June 2004 in the article Technical Analysis of STOCKS & COMMODITIES .
The VFI is based on the popular On Balance Volume (OBV) but with three very important modifications:
Unlike the OBV, indicator values are no longer meaningless. Positive readings are bullish and negative bearish .
The calculation is based on the day’s median instead of the closing price.
A volatility threshold takes into account minimal price changes and another threshold eliminates excessive volume .
The indicator takes into account only the latest 6 month volume action and not the entire data loaded in the chart.
A simplified interpretation of the VFI is that values above zero indicate a bullish state and the crossing of the zero line is the trigger or buy signal.
The strongest signal with all money flow indicators is of course divergence.
The classic form of divergence is when the indicator refuses to follow the price action and makes lower highs while price makes higher highs (negative divergence).
If price reaches a new low but the indicator fails to do so, then price probably traveled lower than it should have. In this instance, you have positive divergence. This indicator is also very useful for improving performance results in trading system design.
Additions
I used the code from Markos Katsanos and implemented it in PineScript.
Parameters:
BTCPERP
1D
ETHPERP
4H
Sources
https://precisiontradingsystems.com/volume-flow.htm
http://mkatsanos.com/volume-flow-vfi-indicator/
The Volume Flow Indicator (VFI) was originally introduced by Markos Katsanos in June 2004 in the article Technical Analysis of STOCKS & COMMODITIES .
The VFI is based on the popular On Balance Volume (OBV) but with three very important modifications:
Unlike the OBV, indicator values are no longer meaningless. Positive readings are bullish and negative bearish .
The calculation is based on the day’s median instead of the closing price.
A volatility threshold takes into account minimal price changes and another threshold eliminates excessive volume .
The indicator takes into account only the latest 6 month volume action and not the entire data loaded in the chart.
A simplified interpretation of the VFI is that values above zero indicate a bullish state and the crossing of the zero line is the trigger or buy signal.
The strongest signal with all money flow indicators is of course divergence.
The classic form of divergence is when the indicator refuses to follow the price action and makes lower highs while price makes higher highs (negative divergence).
If price reaches a new low but the indicator fails to do so, then price probably traveled lower than it should have. In this instance, you have positive divergence. This indicator is also very useful for improving performance results in trading system design.
Additions
I used the code from Markos Katsanos and implemented it in PineScript.
- EMA of the VFI which acts as reversal signal.
- color-gradient filling (PineCoders framework) for the range between the VFI and the signal EMA.
- The bull & bear colors for the indicator are momentum based and configurable through user inputs.
Parameters:
- VFI Length
- Volatility threshold
- Volume threshold
- EMA Signal length
- Smoothing
- Bull color
- Bear color
BTCPERP
1D
ETHPERP
4H
Sources
https://precisiontradingsystems.com/volume-flow.htm
http://mkatsanos.com/volume-flow-vfi-indicator/