Hello and welcome to my first indicator! I'm publishing this indicator as free to use and modify because I think it's a great place to learn and I hope I can teach you something.
There are some terms which you need to understand before I begin explaining this indicator and what it does for you:
Daily Settlement - The price at which a market closes when the trading day closes (RTH or Regular Trading Hours close)
Standard Deviation - A measure in statistics that declares how far away a data point is from the mean when compared with all the data points before it to an extent
Now for the history behind this indicator:
Rule of 16. This goes back to the VIX, or S&P 500 volatility index. The idea behind the volatility index is to determine what magnitude of movement could be expected from the market the following day based on recent movement. The rule of 16 is an easier way to refer to the square root of the number of trading days in a year. There are 252 trading days in a year and the square root of 252 is approximately 15.87. We estimate it to be 16 because it's easier to talk about when it's easier to say and therefore easier to remember.
The relevance of this rule is that when the VIX is at 16, we can expect a market movement of 1% or so unless some special circumstances overrule this estimate. To get the expected market movement, we take 16 and divide by 16 and get 1, or 1%. If the VIX is trading at 24, we get 24/16 or 1.5 which is 1.5% movement. This indicator seeks to simplify the math and lay it out in a visual way to show the highest probability of range the market is expected to trade.
Thanks for taking the time to read my description, I hope you like my indicator.
Special thanks to my trading friends and coaches for helping me complete this indicator.
Supported markets are now:
Future release may include use of a for loop to iterate through pairs of markets to make adding new markets easier.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.