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Volume * Price Momentum oscillator is an indicator used to determine the trend tendency using both price and volume. In fact, it acts upon the principle that the trend tendency, which is characterized here by the price variation, is stronger when the exchanged volume is higher. The indicator is based on the V*PMO indicator available in the Encyclopedia of Technical Market Indicators book.
VPMO formula consists of a short-term exponential moving average (generally 3 bars) of the daily price variation multiplied by the daily exchanged volume. Strong up-trends with high volume have high positive VPMO values while strong downtrend with high volume have low negative ones.
A positive V*PMO value is generally interpreted as a signal to buy or to enter long positions.
The VPMO function (volume_pmo) has no arguments, it uses by default the 3-bar period when it calculates the exponential moving average. However, you can easily add an argument to the function, so you can vary the moving average period.
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.