Indicators of volatility - Page 151
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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. #1501
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    It is very simple for trader we do not put our money on risk , if we do so then chances of losses will increase we develop our trade plan in right of the way with good use of strategies help to get success , working with full efforts and develop own trade system is very much important to trade successfully .

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  3. #1502
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    Find that everyday high volatility indicator which is helping us to identify the market however when trade start our trade on it then in short time frame period make powerful indicator strategy for trading toward success on it. According to my experience and knowledge bollinger band and Rsi both are high volatility indicator strategy for our trading business.

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  4. #1503
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    well ATR is great indicator of th volatility indicators . but for me am so familiar with the Bollinger bands. This indicator helps you to know that the market could become very volatile in the near future when you see a squeeze in the bands. This will help you to get a good number of pips from the trade as long as you are trading in the right direction. There are certainly many other volatility indicators but this is the one that I am most familiar with.

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  5. #1504
    Trader Doge's Avatar
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    Quote Originally Posted by walid94 View Post
    when you see a squeeze
    If you enter the market by The Squeeze - on the breakout of the squeeze - you can base your exit on Bollinger Bands as well.
    If, for example, you enter long and the market does explode up you watch the lower Bollinger Band - while it's going down you hold, when it turns up you close.

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    Wow. Much Forex. So Monies. Very Opportunity.Many Trade. So Amazed. Wow.

  6. #1505
    Trader Toyen's Avatar
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    Quote Originally Posted by biru View Post
    Find that everyday high volatility indicator which is helping us to identify the market however when trade start our trade on it then in short time frame period make powerful indicator strategy for trading toward success on it. According to my experience and knowledge bollinger band and Rsi both are high volatility indicator strategy for our trading business.
    I would like to put something straight here, the high volatile market condition doesn't mean high success for traders, many traders are making mistakes of this. It is better at times that we have a lowered volatility than having the higher volatility that could cause issues for our trading positions. Apart from that, RSI can not trade volatility, but the bollinger bands can still measure it out for us.

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  7. #1506
    Trader J_C_Anderson's Avatar
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    Let me clarify a bit: actualy, RSI could work even in case of relatively high volatility. The idea is that RSI underperforms when the volatility changes. This means that in both high and low volatility RSI would work fine, but it can reate false signals when volatility changes from low to high or vise versa. The best way to find out how the particular indicator works is to backtest it on historical data using special software like Forex tester, for example. It is important to analyse the longes available period of time to get reliable results. If one will use data for at least one year, this period would cover both periods of high and low volatility to see the whole picture.

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  8. #1507
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    Volatility is something that everyone wants to trade because that is where there is more money to make from this market, if we cannot have a way to understand when there will be volatility in the Forex market, then we are going to face serious challenges, the news is the ultimate carrier of volatility many times, although it is better we get into the market without waiting for news to make the market volatile because of the risk associated with it.

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  9. #1508
    Trader rinaji's Avatar
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    For candlesticks study will be very important too i think since they will help us to determine a greater path of the market and this can to help our own accuracy to be higher so it might be less likely for us to loss the money in return, i believe that the knowledge that known to every body is not complete knowledge, learning should continuing process but that is not the right thing, because such market movement has made so many people loss their money, so therefore to me I rather wait for the right time before taking a trading position.

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    If you lose, be patient. If you win, stay humble

  10. #1509
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    We have to understand the market picture and look at our charts and then we have to decide what to trade and whether the time is right to trade. And for this purpose we have to look at the charts, use our knowledge about the indicators and various chart patterns and then decide what to do. Sometimes the market can become quiet before making a breakout, however for trading anything we need to read the charts and indicators well.

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  11. #1510
    Trader Azis Muslim's Avatar
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    Quote Originally Posted by komalam View Post
    We have to understand the market picture and look at our charts and then we have to decide what to trade and whether the time is right to trade. And for this purpose we have to look at the charts, use our knowledge about the indicators and various chart patterns and then decide what to do. Sometimes the market can become quiet before making a breakout, however for trading anything we need to read the charts and indicators well.
    Confirmations must be found and made by our strategy to help us make the final decision to trade. Market may show us some possibilities with different patterns but one thing for sure, nothing is guaranteed and we must stay alert to choose the signal very carefully. Volatility should be our clue to locate our best positioning to enter and if traders are using indicators, then make sure your indicators are working with your experience.

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