The indicator compares short term vs long term market volatility based on previous bars ranges. If current volatility is high compared to the past, the indicator value will be high and vice versa for low volatility values. The resulting calculation is presented as a percentage that oscillates from 0 to 100. Levels called percentiles are plotted to rank volatility.
This measurement can be useful in several ways:
Market regimes: determine the market type (quiet vs volatile) and choose the strategies that work more effectively, like mean reversion on low volatility and breakouts on high volatility.
Market selection: narrow options to a handful of markets that meet specific criteria.
Filter trades: avoid dangerous situations like markets in risk off mode with high volatility readings.
The following are inputs available in the application:
Short term look back – number of periods used for the short term market volatility measurement
Long term look back – number of periods used for the longer term market volatility measurement
The application displayed on this page does not take in to consideration your individual personal circumstances and trading objectives. Therefore it should not be considered as a personal recommendation or investment advice. Past performance is not indicative of future results. There is no guarantee that the systems, trading techniques, trading methods, and/or indicators will result in profits or not result in losses.
This app is only compatible with FXCM MetaTrader 4 software. An FXCM live or demo account is required.
Forex Capital Markets, LLC. (“FXCM LLC”) is an independent legal entity and is not affiliated with Daniel Acuna. Daniel Acuna is not an employee, agent or partner of FXCM LLC.
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