Variable Moving Average

By Samantha Baltodano

TL;DR:

The Variable Moving Average is an Exponential Moving Average that adjusts its sensitivity based on market volatility to provide more accurate signals for both short and long-term markets. 

It is able to better handle sideways moving prices and changing trends compared to other types of moving averages. It does this by automatically regulating its smoothing constant, which allows it to perform well in any market conditions.

What Is the Variable Moving Average Study?

The Variable Moving Average (VMA) study uses an Exponential Moving Average (EMA) that’s able to automatically adjust its smoothing factor based on market volatility. 

Its sensitivity increases by providing a greater weight to the ongoing data as it generates a better signal indicator for short and long-term markets.

The majority of ways to measure Moving Averages cannot account for sideways moving prices versus trending markets and will often generate false trade signals. 

Longer-term moving averages are slow to react to reversals in trend when prices move up and down over a long period of time. 

The Variable Moving Average on the other hand regulates its sensitivity. This allows it to function better in any market conditions by using automatic regulation of the smoothing constant.

Summary

• The Variable Moving Average (VMA) is a type of Exponential Moving Average (EMA) that adjusts its smoothing factor based on market volatility.
• It is more sensitive to ongoing data and can generate better signals for short and long-term markets.
• The VMA is able to function better in any market conditions due to its automatic regulation of the smoothing constant.

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