can be referred to many things, but a commonly accepted definition of is that it’s a measure of the risk or uncertainty in the market. Higher is equal to more risk in the market. A simple way of describing it is that when is high, the value of the market can be spread out over a larger range of values. This means that the price of the market can change dramatically over a short time period in either direction. A lower means that a market's value does not fluctuate dramatically, and tends to be steadier. However, how to calculate and to apply has been widely debated and many different calculations have been used. Volatility Index is a must for a professional trader in today's volatile markets.
This Index is derived from research within .
HOW TO USE
1. Use the indicator to detect low- respectively high .
2. Enter the market when the is low, and exit the market when the is high.
3. Use the indicator to identify when the peaks. Can indicate that the market will shift or can be good areas to take profits.
When the market is in a positive trend, the is low and stable. The opposite happens when the market is in a negative trend, the is high and price moves boldly.
As a rule,when increases unusually(abnormal) in relation to previous periods something is happening in the market, then wait until the peaks or when the indicator does not make any new highs (the indicator becomes flat), and in conjunction with that the trending price action doesn’t make any new lows or respectively highs. When this happens there is a high probability that the market will take a temporary turn.
Positive volatility refers to when the index increases with green this means that the buyers are more aggressive than sellers. (Can indicate a trend change)
Negative volatility refers to when the index increases with red this means that the sellers are more aggressive than buyers. (Can indicate a trend change)
INDICATOR IN ACTION
This indicator is best presented live, the graphs below gives a hint of how the Index works.
The indicator works on any market, security, currency, stock, etc. and on any timeframe.
I hope you find this indicator useful, and please comment or contact me if you like the script or have any questions/suggestions for future improvements. Thanks!
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ACCESS THE INDICATOR
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Copyright by Zeiierman.
The information contained in my scripts/indicators/ideas does not constitute financial advice or a solicitation to buy or sell any securities of any type. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
My scripts/indicators/ideas are only for educational purposes!
- Impulse signals are added.
- Improved calculations for better accuracy!
- Keep track of increased volatility with alerts!
A volatility spike can either be the end of a trend or the beginning of a new trend. That is why we always want to keep track of volatility spikes!
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