Ease of Movement (EMV) is an indicator created by Richard W. Arms, Jr. He believed that there were three important pieces of information presented in a single bar of trading: the ease of trading, the direction of movement, and the magnitude of movement. For example, a stock which moves up significantly on light volume is different from a stock the barely moves on heavy volume. Arms developed an indicator that combines both price action and volume. The calculation is performed as follows:
Find the average volume for the chart. (Add up all the volume figures and
divide by the number of bars on the chart).
Find the average bar range for the chart. (For each bar on the chart, subtract the high
from the low and add this figure to a running total that starts at zero. When you have
added all the bar ranges to the total, divide by the number of bars on the chart).
For each bar on the chart, you need to perform the following steps to get that bar’s EMV value:
1. Calculate the percent midpoint move for the bar:
Current bar’s midpoint = (Current bar’s high + Current bar’s low) / 2.0
Previous bar’s midpoint = (Previous bar’s high + Previous bar’s low) / 2.0
Midpoint move = Current bar’s midpoint - Previous bar’s midpoint
Percent midpoint move = Midpoint move / Current bar’s midpoint * 100
2. Calculate the normalized volume for the bar:
Current bar’s volume / Average volume * 100.0
3. Calculate the normalized range for the bar:
(Current bar’s high - Current bar’s low) / average bar range * 100
4. Calculate the box ratio for the bar:
Normalized volume / Normalized range
5. Calculate the ease of movement (EMV) for the bar:
Percent midpoint move / box ratio
You now add up the number of EMV values that you wish to use. Arms recommends
using a 13 bar value, so you would add up the past 12 bars EMV values, plus the current
bar’s EMV value, to get the 13 bar EMV.
Reference: Arms, Richard W, Jr. Volume Cycles in the Stock Market: Market Timing through Equivolume Charting. Homewood, Illinois: Dow Jones-Irwin, 1983.