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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.
