Volatility Ratio V2 Indicator
MT4Also Available for MT5An ideal Volatility Ratio V2 indicator that gives buy and sell signals based on the average true range.
Description
If you are a break-out trader, the Volatility Ratio V2 is for you. The indicator identifies the trading range and gives you a signal of an impending price breakout. The inductor uses the following formula to determine the volatility rating.
Today’s true range / true range of N numbers of days.
The true range is determined by using the maximum of today’s high and yesterday’s close minus the minimum of today’s low and yesterday’s close. You can use the indicator to trade any instrument and any time frame.
How to Trade Using the Volatility Ratio V2 Indicator
The whole idea of using this indicator is to identify when the price moves beyond the true range. This is an indication of a possible reversal. Essentially, it identifies instances when the market has surpassed the price range to constitute a significant breakout. The signal is given by a reading of 0.5, but different traders use varying figures depending on the market conditions.
Ideally, the 0.5 level indicates the true angle is double the previous true range. You might also want to use other indicators, such as the volume, to confirm the breakout signal because volume increases after a breakout.
Trading Example
The picture shows the price action of Great Britain vs. the US dollar. The indicator gives the buy signal by posting a blue spot on the indicator and a blue arrow in the price action. Similarly, the red arrow signifies a sell signal. Simply buy when a blue arrow and spot form on the price action and indicator.
Conclusion
The Volatility Ratio V2 is an ideal indicator based on the true range. It gives the signals by posting an arrow on the chart. You simply enter when the market according to the arrow color. It is an excellent addition to enhancing your trading strategy.
1 2 3 4 5