Description
VelocityAndAcceleration is a momentum indicator designed to evaluate trend strength. The study calculates how quickly a price is moving (velocity) and the rate at which the price’s movement is changing (acceleration).
Average velocity is calculated as:
where:
pis the price of the current bar.pnis the price of the previous bar.iis the lookup period, which ranges from 1 ton.nis the total length of the period used in the calculations.
The average velocity is then smoothed using a moving average (set with the average type parameter).
Average acceleration is calculated as:
where:
vis the current smoothed average velocity.vnis the previous smoothed average velocity.iis the lookup period, which ranges from 1 ton.nis the total length of the period used in the calculations.
Acceleration is displayed as a histogram and can be interpreted as follows:
- Positive and up. Acceleration is above zero and higher than the previous acceleration value.
- Positive and down. Acceleration is above zero and lower than the previous acceleration value.
- Negative and up. Acceleration is below zero and higher than the previous acceleration value.
- Negative and down. Acceleration is below zero and lower than the previous acceleration value.
Input Parameters
| Parameter | Description |
|---|---|
price
|
The type of price used in the calculations. |
length
|
The length of the period used in the calculations. |
average length
|
The length of the average used to smooth the calculations. |
average type
|
The type of moving average used in the calculations: simple, exponential, weighted, Wilder’s, or Hull. |
Plots
| Plot | Description |
|---|---|
Velocity
|
The Velocity plot. |
Acceleration
|
The Acceleration plot. |
Further Reading
1. “An Adaptive Moving Average For Swing Trading” by Scott Cong. Technical Analysis of Stocks & Commodities, September 2023.
Example*
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.
Past performance is no guarantee of future performance.