VIDYA (Chande)

This script brings you VIDYA – the Variable Index Dynamic Average, developed by Tushar Chande. It’s not your typical moving average. Unlike the standard SMA or EMA, VIDYA adapts its speed and smoothness based on real-time market momentum using the Chande Momentum Oscillator (CMO).

Think of it like a moving average that gets faster during strong trends and slows down during sideways or choppy markets — just like how a smart trader would!

🧠 What Makes VIDYA Different?
Traditional moving averages use fixed smoothing, so they lag more during big moves or chop during weak trends.
VIDYA fixes that by adapting its behavior dynamically:

When momentum is strong → VIDYA reacts faster 🚀

When momentum is weak → VIDYA smooths out the noise 🧘

⚙️ How It Works (Explained Simply):
1️⃣ CMO Calculation (Chande Momentum Oscillator):
We look at the past cmoLength candles (default 9) and:

i) Add up all the positive price changes (gains)

ii) Add up all the negative price changes (losses)

iii) Use those to compute a normalized momentum score between -100 and +100

📌 CMO = (Gains - Losses) / (Gains + Losses)

• This gives us a momentum reading that powers the next step.

2️⃣ Dynamic Alpha Smoothing:
• We convert the absolute value of the CMO into an alpha — this is the "speed" of the VIDYA.

📌 Higher momentum = higher alpha → faster response
📌 Lower momentum = lower alpha → smoother behavior

3️⃣ VIDYA Formula:
• Finally, we apply the smoothing:

📌 VIDYA = α × Price + (1 - α) × Previous VIDYA

• This equation continuously adapts to market behavior — trending or ranging.

📊 What’s Plotted?
🟠 The VIDYA Line:
A smooth, responsive line plotted on your price chart that adjusts in real-time with price momentum.

🔎 How to Use It:
✅ Use it like a moving average, but smarter:

• Price > VIDYA and rising → Trend is likely up

• Price < VIDYA and falling → Trend is likely down

• Flat VIDYA = Possible consolidation or sideways market

✅ Combine with:

• Breakout strategies (VIDYA confirms momentum)

• Reversal entries (look for price crossing VIDYA)

• Volatility filters (ignore signals when VIDYA flattens)

🧪 Bonus Tip:
Pair this with a volume indicator (like my Volume Confirmation Bars or Volume Strength Highlight) to confirm whether momentum is backed by real participation or just a fakeout.

📩 Want alerts, dual-timeframe overlays, or VIDYA with other base inputs (like typical price or HLC3)? Let me know — happy to expand this for your setup!

Stay adaptive, not reactive — trade smarter with VIDYA! 🧠📉📈