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Thread: Indicators of volatility

  1. #1
    Super Moderator RoboForex Trader's Avatar
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    Indicators of volatility

    Another group of indicators – indicators of volatility. As you understand from its name, this indicator somehow measures volatility of price action.The most popular indicator of volatility is Average True Range (ATR).

    Use can see sample on the chart below:


    Picutre 1.

    On the picture above you can see daily EURUSD chart with ATR(5) indicator. It means that parameter of this indicator is equal to 5.

    Curve of the indicator goes up when volatility increases and goes down when it decreases regardless of destination of current trend – bullish or bearish. ATR is used for indentifying market conditions. Compare relative movements of indicator curve and price chart. When candlesticks become smaller, value of indicator decreases. The lower volatility, the lower value of ATR you will see.

    «True Range» is calculated from 3 parameters:

    • difference between current high and low
    • difference between previous close and current high
    • difference between previous close and current low


    Average True Range (ATR) is equal to moving average applied to «True Range» Parameter of ATR shows quantity of periods (candlesticks) calculated.

    If indicator curve is located lower, volatility is considered to be low, if higher – volatility is high. Notice that this indicator does not show destination for your trades, like oscillators do.
    ATR is applicable for estimating current market conditions.

    Every indicator of volatility has its advantages and drawbacks. You should use those corresponding to your needs and tasks.

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  2. #1521
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    Short term trading is also risky and so we should never ignore risk management. We have to keep eye on safety. When we join forex trading we should not concentrate on the profits potentials first we must focus to learn what it takes to be a good trader to avoid us having a lot of problems and that one of the reasons a lot of people fail.

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  3. #1522
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    All indicators one way or the other indicates the volatility of the market and all we need to do is that we have to learn about how to make good use of the indicators when trading. I use my bollinger band and then the candle stick, they help me a lot when I would want to trade and tells me on what the market is possibly going to react.

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  4. #1523
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    Trader most of time face losses in this market if a trader do not have knowledge and required skill of trading we have to identify it by trust own knowledge and with own skill , if we have such learning we develop our trade plan easily which will give trader opportunity to earn handsome profits from this market .

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  5. #1524
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    In my trading system I don't have any indicator and just working with some horizontal lines to calculate the volatility, support and resistance. Forex is a risky business and newbies should avoid to use the indicators they should believe their skills as price perform rapid moves in short period of time during volatility and can cause the reason of quick loss which is worst, so be careful.

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  6. #1525
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    Quote Originally Posted by Nova View Post
    In my trading system I don't have any indicator and just working with some horizontal lines to calculate the volatility, support and resistance. Forex is a risky business and newbies should avoid to use the indicators they should believe their skills as price perform rapid moves in short period of time during volatility and can cause the reason of quick loss which is worst, so be careful.
    Thats very true , most of us traders are hating to work on the trading indicators because this is really tough for us to quickly change the decisions and get the perfect tracks with different indicators and we lost the trade if we dont have the good knowledge abut them so we must take the right strategies and good knowledge that provide us perfect earning results .

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  7. #1526
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    To get a good result in trading or to earn bigger amount of pips it better to stick to long term trading but make sure that you have a technical learning and implementation in trading, indicator's are lagging specially Stochastic, its important for trader's to know that when have to enter in the market for buy and sell in our trading, those signals should be filter out with more confirmations. Personally I don't use these three indicators.

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  8. #1527
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    We should learn the tools in the form of indicators well which can help us determine the trend which should be followed. Forex trading indeed is a great opportunity for people like those. As long as they possess all the necessary things needed to start trading and a good attitude in this business, then success would not be impossible.

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  9. #1528
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    Quote Originally Posted by jassim View Post
    We should learn the tools in the form of indicators well which can help us determine the trend which should be followed. Forex trading indeed is a great opportunity for people like those. As long as they possess all the necessary things needed to start trading and a good attitude in this business, then success would not be impossible.
    Using indicators is good but we should be aware of the indicators we are using, their functionalities and the right techniques of using them. I have started avoiding scalping since long and about ATR I think this indicator can also be used for other kinds of trading. Volatility indicators help us to find the momentum in the market which can help us to detect whether market can be expected to make breakouts.

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  10. #1529
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    There will always be volatility in the market, as long as there will continue to be news about the market especially those crazy news such as the NFP, FOMC and the like that always make the market to go crazy. And we need some good indicators like this to help us to deal with such volatility in the market.I love the stochastic and a new indicator called solar wind which gives a very good indication about the volatility in the market.The ATR is also a good indicator for volatility.

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  11. #1530
    Trader Azis Muslim's Avatar
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    Quote Originally Posted by glory3 View Post
    There will always be volatility in the market, as long as there will continue to be news about the market especially those crazy news such as the NFP, FOMC and the like that always make the market to go crazy. And we need some good indicators like this to help us to deal with such volatility in the market.I love the stochastic and a new indicator called solar wind which gives a very good indication about the volatility in the market.The ATR is also a good indicator for volatility.
    Market session is also indicator of volatility we can find directly in our chart. Pay attention to specific hours in market to expect better volatility that may favor our trading and suitable with our strategy to get our trades closed in take profit faster. I am usually using London and New York as my best sessions to trade with higher volatility without using any indicators like in this thread, which is ATR that stands for Average True Range.

    I can not use news as my volatility indicator because they are just optional signal I can use and ignore. I never counting my strategy with news with full accuracy because they are not simple to understand and expecting market to move with news is hard to do. Technical analysis seems my best thing to do to trade with market without taking much on news or other things that may interrupt my current strategy.

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