Volatility Balance
This "Volatility Balance" indicator measures volatility from a different perspective.
It plots both an upside (green) and downside (red) volatility rating as well as a histogram depicting either the difference between the two or the two combined.
First, it calculates the ratio of the candle body (open to close) in relation to the entire candle range (high - low). This is the "candle body size ratio".
Secondly, it calculates the "dominance ratio" of the upside volatility (close - low) or downside volatility (high - close), in relation to the entire candle range (high - low)
Thirdly, it then uses the above values to derive the upside and downside power.
The upside and downside powers are calculated by multiplying the "candle body size ratio" to the upside or downside "dominance ratio" and then to the entire candle range.
It then divides this value by the close of the candle to normalize the overall value. After which it then multiplies this final value by 100, to get a percentage value between 0 - 100%.
It then averages the upside or downside "power value", using a volume-weighted moving average with the averaging period initially set to 7 periods, but this can be altered in the format settings.
The volatility difference or volatility size is displayed as a histogram style behind the green and red upside and downside power lines (depending on which value the user chooses), via an option in the format settings.
The volatility difference is the upside minus the downside and the volatility size is the upside and downside added together.
In case the user wishes to see EACH candle's power value before it has been averaged with volume, there is an option in the format settings to show each candle's upside or downside "power". If this method is chosen, the histogram will be hidden. There are also various check boxes, in case the user wishes to hide any of the plotted values.
The volatility size can determine how much energy has been behind the change in price over the period measured.
The volatility difference can determine how much upwards or downward energy is present within the period measured, in other words, the possible direction.
The use of the candle body ratio helps to determine the balance between upwards and downwards energy. If it is small, then it implies that there is more of a balance between buyers and sellers and therefore less volatility, as the price hasn't moved as much than if the body of the candle was larger. Smaller values indicate that price may not move as much and therefore lock up your funds longer until price starts to move again.
The use of a volume-weighted moving average helps to give higher volume periods more significance towards a possible price shift.
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This indicator was originally inspired by the Profit Trailer Feeder add-on and it's volatility groupings.
If you don't already have the Profit Trailer Feeder add-on to the Profit Trailer software, and you have now decided to get it, please help me out and use my affiliate link below. It won't cost you any extra, but it helps keep the lights on, so I can create more of these indicators.
Kindest Regards
Created 2018 - by @Squiggles#8806
LTC Tip Jar: LX4bUBdjiRPsagUbZoAczSGgDC4YqTJL7w
Profit Trailer Feeder affiliate link: https://cryptoprofitbot.com/?ref=Squiggles
It plots both an upside (green) and downside (red) volatility rating as well as a histogram depicting either the difference between the two or the two combined.
First, it calculates the ratio of the candle body (open to close) in relation to the entire candle range (high - low). This is the "candle body size ratio".
Secondly, it calculates the "dominance ratio" of the upside volatility (close - low) or downside volatility (high - close), in relation to the entire candle range (high - low)
Thirdly, it then uses the above values to derive the upside and downside power.
The upside and downside powers are calculated by multiplying the "candle body size ratio" to the upside or downside "dominance ratio" and then to the entire candle range.
It then divides this value by the close of the candle to normalize the overall value. After which it then multiplies this final value by 100, to get a percentage value between 0 - 100%.
It then averages the upside or downside "power value", using a volume-weighted moving average with the averaging period initially set to 7 periods, but this can be altered in the format settings.
The volatility difference or volatility size is displayed as a histogram style behind the green and red upside and downside power lines (depending on which value the user chooses), via an option in the format settings.
The volatility difference is the upside minus the downside and the volatility size is the upside and downside added together.
In case the user wishes to see EACH candle's power value before it has been averaged with volume, there is an option in the format settings to show each candle's upside or downside "power". If this method is chosen, the histogram will be hidden. There are also various check boxes, in case the user wishes to hide any of the plotted values.
The volatility size can determine how much energy has been behind the change in price over the period measured.
The volatility difference can determine how much upwards or downward energy is present within the period measured, in other words, the possible direction.
The use of the candle body ratio helps to determine the balance between upwards and downwards energy. If it is small, then it implies that there is more of a balance between buyers and sellers and therefore less volatility, as the price hasn't moved as much than if the body of the candle was larger. Smaller values indicate that price may not move as much and therefore lock up your funds longer until price starts to move again.
The use of a volume-weighted moving average helps to give higher volume periods more significance towards a possible price shift.
---------------------------------------------------------------------------------------------------------------------------
This indicator was originally inspired by the Profit Trailer Feeder add-on and it's volatility groupings.
If you don't already have the Profit Trailer Feeder add-on to the Profit Trailer software, and you have now decided to get it, please help me out and use my affiliate link below. It won't cost you any extra, but it helps keep the lights on, so I can create more of these indicators.
Kindest Regards
Created 2018 - by @Squiggles#8806
LTC Tip Jar: LX4bUBdjiRPsagUbZoAczSGgDC4YqTJL7w
Profit Trailer Feeder affiliate link: https://cryptoprofitbot.com/?ref=Squiggles