Market volatility is an important factor to consider when analysing the behaviour of security prices. During times of greater volatility, the trend changes more frequently and more rapidly. In periods of lower volatility, price changes are slower and less frequent. These changes have an impact on indicator readings because the signals may arrive too early or too late. This is why the volatility factor must be included in the calculations. And today I’ll show you the Chaikin Volatility indicator.
Chaikin Volatility Fundamentals
Contents
Marc Chaikin’s indicator is a tool that measures volatility by analysing the difference between the asset’s low and high prices over a specific time period. It is referred to as the Chaikin Volatility Indicator (VT).
Including the Chaikin Volatility indicator on the Quotex chart
Please sign in to your Quotex account. Select the financial instrument you will trade during this session. Decide on a chart period. Click on the Chart Analysis icon, then on the Volatility indicator group. Chaikin Volatility will be shown.
Of course, you can also begin typing the name of the required indicator into the search window.
The VT will be displayed in a separate window below your price chart. It takes the shape of a line that oscillates around the zero line.
On Quotex, how do you read the Chaikin Volatility oscillator?
The Chaikin Volatility Index was applied to the GBPUSD chart.
What is the Chaikin Volatility?
The indicator computes the exponential moving average of the price difference between high and low. Then it calculates the percentage change in this moving average over time.
Chaikin recommends reviewing volatility with a 10-day moving average.
When the indicator displays low values, it indicates that the intraday price range from high to low is relatively constant. When the indicator readings are high, the intraday price range from high to low is quite large.
When the price creates tops on the price chart and volatility increases in a short period of time, traders become concerned. When market tops are accompanied by declining volatility over an extended period of time, it indicates a growing bull market.
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On Quotex, how do you read the Chaikin Volatility oscillator?
Long-term declines in volatility can indicate the formation of a market top.
When prices form bottoms and volatility decreases over time, it indicates that traders are losing interest in the market.
On Quotex, how do you read the Chaikin Volatility oscillator?
The final stage of a downtrend with steadily decreasing volatility.
When volatility spikes in a short period of time and the market bottoms, it indicates that traders are panicking and selling.
On Quotex, how do you read the Chaikin Volatility oscillator?
The market is falling, with a peak in Chaikin Volatility – a panic sell-off.
Low volatility and a decrease in volatility can be observed during price increases.
A slow increase in volatility can occur at the top of an uptrend, prior to a trend reversal.
During the downward move, there is more volatility.
A short-term increase in volatility can be seen near the bottom of the downtrend.
Last words
The Chaikin Volatility indicator is used to assess volatility. In calculations, the author suggests using a 10-day moving average.
Go to the Quotex demo account and experiment with the Chaikin Volatility. This is a free practise account where you can test out any new indicator or trading strategy. It comes with virtual money that you can use whenever you want. Even if the transaction fails, you do not lose your money. Before you move on to a real account, practise your skills.
The comments section is located below. Please share your thoughts on the Chaikin Volatility indicator. I’d be delighted to hear from you.
