Volatility Index (Expo)
can be referred to many things, but a commonly accepted definition of is that it’s a measure of the risk or uncertainty in the market. Higher is equal to more risk in the market. A simple way of describing it is that when 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 means that a market’s value does not fluctuate dramatically, and tends to be steadier. However, how to calculate and to apply 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.
HOW TO USE
As a rule,when increases unusually(abnormal) in relation to previous periods something is happening in the market, then wait until the 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 index increases with green this means that the buyers are more aggressive than sellers. (Can indicate a trend change)
Negative volatility refers to when the index increases with red this means that the sellers are more aggressive than buyers. (Can indicate a trend change)
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