| Summary: | Our financial and market action change every minute of every day. These
markets are dynamic because traders constantly adjust to changing perceptions
and participants. Therefore we need dynamic indicators that vary the time periode
used in analyzing market action. Variable Index Dynamic Average (VIDYA) is an
indicator that adapted Exponential Moving Average (EMA) that can dynamically
follow the movements of stock prices. Equal as Exponential Moving Average
(EMA), VIDYA also need weight in its calculation methods. In this paper, the
weight of EMA is used to determine the weight of VIDYA. VIDYA can be
calculated using three different methods, such as standard deviation, Chande
Momentum Oscillator (CMO), and coefficient of determination. These calculation
method is used to determine the volatility index that worth to predict stock price
movements and predict the trend in the future. In addition, VIDYA can be used as
trading strategy and determine buy signal or sell signal that using the breakout
point.
Keyword: technical analysis, volatility index, exponential moving average,
standard deviation, coeffitient of determination, momentum indicator
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