For many years our traders find themselves thinking how to measure the real market volatility. It is very common to look for VIX as the way market is behaving. Other can explain that volatility is totally linked with risk or fear of taking risk, bringing the analysis to as higher the volatility as harsh it gets. Since we haven’t found a good number to represent what volatility means we discovered a way to scale and show it in a market indicator. Our indicator is going back to the roots of volatility definition and used the statistics concepts over the price model.
Look for spikes This indicator is very versatile, allowing the trader using it in several time frame charts or even bar charts where data series are range, tick or volume. One of the best results indeed for instruments like NQ, ES or YM is using VOLATILITY indicator over Tick Charts. That shows the real price movement and make it very easy to identify the spikes in the curve plot. Spikes in the VOLATILITY indicator represent sharp market movements, helping the trader to jump on faster in a reliable position. This indicator can be combined with other directional indicators to confirm side or trend. Combine with other indicators: Volatility indicator shows if the market is trending but does not show the direction. In order to get a better decision to put your orders, you should use directional indicators like SMA, EMA or MACD. It is the best way to avoid false positive entry.
This indicator was developed when we were looking for market patterns during the huge period where volatility was low, and any signal of market movement is important. In this scenario, a very well adjusted moving average strategy is a great opportunity to find good entry points. QWAVAT combines exponential moving averages and ADX variation to look for inversion points. It has been working for Indices (ES, NQ) and Currencies (6E, 6B, 6C). It is very flexible for using with time frame and tick count data series. Most recommended set up is turn on the sound when you get a green or red arrow, meaning entry points for buy and sell or exit position or reversal.
The red or green arrow represents entry points. Moving average crossovers produce relatively late signals. After all, the system employs two lagging indicators, that is the reason QWAVAT has fixed the lag, put the trigger right there.
QW LoL is a new concept indicator. L o L stands for Limit of Length. That is what we are looking for in situations where the market is moving sideways but there is a trending inside the curve. The challenge would be identify the length of curve and estimate with good probability that the price would rebate. Then we found the limit of lenght for market reversion.
Traders should look for the crossover moments of the green and red lines. When the green line crosses under the red represents a buy signal or market gaining momentum for purchase. The blue bars show when the momentum loses strength and starts a reverse trend that it is only confirmed with the next bars crossover. When the blue line interrupts the sequence it is an opportunity to exit the trade. This indicator works with indexes or currencies, the ^ Period ^ parameter is used to count the previous bars. When the market varies greatly the best analysis is to increase the bars and the value of the ^ Period ^ to avoid interpreting noise in the price.