This indicator measures the market volatility by using Bollinger Bands indicator bands distance and cluster it in two low or high volatility histogram bars.
If the current distance between the top and bottom bands of Bollinger Bands indicator is greater than its x (Periods) previous values mean then volatility is high and if it’s smaller then volatility is low.
The best possible way to use this indicator is as a filter for finding trending or not trending condition because when volatility is high price tends to trend and when volatility is low price pullbacks so if you are a trend trader it can help you a lot in avoiding trading in consolidation situations.
- Easy to use and understand with just one parameter
- Works on all symbols
- Uses the Bollinger Bands data in a way that manually you can’t