Volatility

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Definition

The Volatility indicator measures the market volatility by plotting a smoothed average. The indicator searches for a down (up) setup and triggers on the day after an up (down) price extension has finished. The Price Reversal indicator identifies and plots only the first trigger of the day.

Volatility is a statistical measure of the dispersion of returns for a given security or market index.

Volatility-based indicators are valuable technical analysis tools that look at changes in market prices over a specified period of time. The faster prices change, the higher the volatility. The slower prices change, the lower the volatility. It can be measured and calculated based on historical prices and can be used for trend identification. It also typically signals if a market is overbought or oversold (meaning price is unjustifiably high or unjustifiably low), which can point to a stalling or reversal of the trend.

Default Inputs

Length sets the number of bars used for calculation, 14 by default.