The VBM indicator offers numerous benefits to traders who orient their trading around . For these traders, VBM expresses momentum in a normalized, universally applicable ‘multiples of volatility’ ( MoV ) unit. Given the universal applicability of MoV , VBM is especially suited to traders whose trading incorporates numerous timeframes, different types of securities (e.g., stocks, Forex pairs), or the frequent comparison of momentum between multiple securities.
The calculation for a based momentum (VBM) indicator is very similar to , but divides by the security’s instead. The indicator (ATR) is used to compute .
VBM(n,v) = (Close - Close n periods ago) / ATR(v periods)
For example, on a , VBM(22,65) calculates how many MoV price has increased or decreased over the last 22 trading days (approximately one calendar month). The second parameter is the number of periods to use with the ATR indicator to normalize the momentum in terms of .
For more details, there is an article further describing VBM and its applicability versus .