Volatility Index (Expo)


Volatility can be referred to many things, but a commonly accepted definition of volatility is that it’s a measure of the risk or uncertainty in the market. Higher volatility is equal to more risk in the market. A simple way of describing it is that when volatility is high, the value of the market can be spread out over a larger range of values. This means that the price of the market can change dramatically over a short time period in either direction. A lower volatility means that a market’s value does not fluctuate dramatically, and tends to be steadier. However, how to calculate and to apply volatility has been widely debated and many different calculations have been used. Volatility Index is a must for a professional trader in today’s volatile markets.

This Volatility Index is derived from research within Volatility .


1. Use the indicator to detect low- respectively high volatility .

2. Enter the market when the volatility is low, and exit the market when the volatility is high.

3. Use the indicator to identify when the volatility peaks. Can indicate that the market will shift or can be good areas to take profits.

When the market is in a positive trend, the volatility is low and stable. The opposite happens when the market is in a negative trend, the volatility is high and price moves boldly.

As a rule,when volatility increases unusually(abnormal) in relation to previous periods something is happening in the market, then wait until the volatility peaks or when the indicator does not make any new highs (the indicator becomes flat), and in conjunction with that the trending price action doesn’t make any new lows or respectively highs. When this happens there is a high probability that the market will take a temporary turn.

Positive volatility refers to when the volatility index increases with green candlesticks this means that the buyers are more aggressive than sellers. (Can indicate a trend change)
Negative volatility refers to when the volatility index increases with red candlesticks this means that the sellers are more aggressive than buyers. (Can indicate a trend change)


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