Back Issues Archive Traders' Glossary Novice Traders' Notebook Products Store. Combine your moving averages with volume and see what happens. The averages I use enhance performance by modifying the simple moving average with volume information.
Volume represents the number of participants willing to wager at various points of price and time.
My price averages measure the commitment expressed through a close, weighted by that day's volume compared to the total volume during the period of the average. Each column is the percent of profitable trades. Weighting the price average gives greater emphasis to those days with greater volume and less emphasis to those days with lighter volume. By enhancing the performance of your moving averages with volume, you can increase responsiveness and reliability. To illustrate how volume information improves performance, I tested and compared two trading systems.