Python Finance and Math Tutorials: Ease of Movement introduction

Key Takeaways

hello everybody and welcome to yet another python mathematics and finance indicators tutorial video in this video in the next couple of videos we're going to be discussing the ease of movement indicator commonly denoted as a emv not to be confused with the dmv where there is certainly no ease of movement the ease of movement indicator is a volume based oscillator as the name suggests the idea is to measure how easily the price can move in a direction although i would really more so consider this a uh closer to like overbought and oversold indicator to be honest but it is directionally based it's based on volume and it's based on the price movement so it does really mean ease of movement but i'm not really sure that it it is exactly accurate in its intention anyway it is directionally based and will oscillate around a zero line calculation of ease of movements a fairly simple calculation it's going to be the high plus the low divided by two so that gets you like your price minus the previous high plus the previously divided by two so what was the change in price divided by the total like bar just that volume for that one day right divided by the high minus the low obviously ph as i said was previous high pl previous low volume you can divide it by pretty much anything you want you could divide it by 15 if you really really wanted uh usually you're going to see 1 million or even 100 million being used it's basically just trying to get that volume number down a little bit so anyway that's the purpose but no matter what you do it by it won't it doesn't really matter but it does kind of matter um if you're trying to compare two companies so if you were to compare them you would either you'd want to normalize this line either with percent change or make this volume divided by something some measure of the volume you'd want to make it more of like a divided by some factor of that total volume something like that to normalize the two lines but just keep that in mind so let's go ahead and look at a couple examples now of this so let me bring up our charting application here whoops so here's our charting application we'll go ahead and plot out ebay and so here's our ebay indicator here with the emv of 14. if you can see we drew the zero line let me go ahead and fit this to our window so as you can see uh as it's moving down quite quickly the ease of movement to move down is only increasing and then as we go up it increases again as well and down and up and down and up a bunch of times there's a couple of interesting ones like over a long period if you look at a company like apple for example this is how it will defer a lot from like your typical rsi and it's going to do something like this because it's normalized across the entire thing right so so only until real recently like the ease of movement has been you know pretty stable compared to the recent stuff and it's just kind of flirted around then it really went crazy and it's not to say that it didn't really move it's just more of like a charting issue where you can see um you know here it looks like almost like it didn't move at all but if we zoom in like let's say we want to zoom in just this point here and let's uh let's do this that's good enough i suppose and we just you just have to understand that this line is fluctuating a lot less and this is a really good example of um showing you guys the change in in the actual trade volume for even apple right and like right here you know you've got a lot of volume not too much movement the price has been this way and then as we get over here the prices have changed quite a bit and there's a lot of movement so this stuff like dwarfs this stuff over here um another decent one to do would be like morgan stanley i think is recently giving us a flat line so there's a couple of examples how it will actually indeed defer from uh like the rsi because the rsi is is almost normalized no matter what the price and volume is right it's always going to be wiggling around and going crazy and it kind of like resets itself every now and then whereas like this line isn't going to reset itself it's going to be everything is plotted based on the same parameters so um anyway that's just kind of like an example of where this indicator can go kind of strange but again you can kind of zoom in just on like that one you know section and now you're starting to see some movement again so anyway that is our emv or ease of movement indicator in the next video i'll be showing you guys how to calculate it within python and then in the video after that we'll actually be plotting it in python's matplotlib so as always thanks for watching