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The VIDYA moving average indicator

A technical analysis indicator by Tushar Chande

The Variable Index Dynamic Average (VIDYA) was developed by trader and technical analyst Tushar Chande. The objective is to improve the exponential moving average (EMA). Tushar Chande presented his VIDYA for the first time in the magazine Technical Analysis of Stocks & Commodities.

The VIDYA is also a moving average indicator. It is an adaptive weighted moving average. The VIDYA has a unique way of calculating the average price. The indicator uses the volatility to dynamically change the periods over which the average is calculated. The higher the volatility, the shorter the averaging period, the faster the VIDYA indicates the price changes. The lower the volatility, the longer the averaging period, the slower the VIDYA indicates the price changes.

How to use the VIDYA average

The VIDYA average can be used as a trend filter or as a trading signal. The indicator can be used alone or in combination with a simple moving average.

This example shows the VIDYA used as a trend filter. The filter colours the background of the chart to indicate the market trend.

The VIDYA moving average indicators reacts faster.

This example shows the VIDYA being used as a trading signal. Two trading signals are visible.

A trading signal based on moving averages.

This example shows the VIDYA average in combination with a simple moving average. Traders use the cross of the two lines as a signal. The red or green colours between the lines can be used as the trend filter.

A moving averages cros trading signal using the superior VIDYA moving average.

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Given that the VIDYA is a moving average concept, many other combinations are possible.

These are the advantages of the VIDYA moving average indicator

  • The indicator can be used as a trend filter.
  • The indicator can be used as a trading signal (NanoTrader Full only).
  • The indicator can be integrated in many trading strategies.
  • The indicator is easy to understand and to use.
  • The indicator is FREE.

The VIDYA indicator practical implementation

  • Open the chart of the instrument you wish to trade.
  • In the WHS Proposals folder, select the VIDYA in the indicators section.

More client proposals: the Fibonacci moving average and the Zero Lag moving averages