What it is and how to use it
What is it?
Chaikin Volatility (CV) measures the difference between the high and low prices over a specified period, typically using an exponential moving average (EMA). It emphasizes the rate of change in volatility, making it sensitive to sudden shifts in market behavior.
Who made it?
Chaikin Volatility was developed by Marc Chaikin, a renowned technical analyst, and is part of the broader suite of Chaikin Indicators.
How is it calculated?
The formula for Chaikin Volatility (CV) is:
CV = (EMA(high - low, N) - EMA(high - low, N-1)) / EMA(high - low, N-1) * 100
Where:
EMA(high - low, N) is the exponential moving average of the high-low price range over N periods.
Code (ProRealTime)
How do you use it?
Chaikin Volatility can be used in several ways:
Volatility Analysis:
Identify periods of increasing or decreasing volatility. Higher values indicate higher volatility, while lower values indicate lower volatility.
Trend Analysis:
Helps you identify potential market turning points and the beginning of new trends by analyzing changes in volatility.
Risk Management:
Adjust your trading strategies based on the rate of change in volatility, helping you manage risk more effectively.
FAQ
Q: Is Chaikin Volatility a leading or lagging indicator?
A: Chaikin Volatility is a lagging indicator. It measures the difference between the high and low prices over a specified period, indicating changes in volatility.
Q: What are the best settings for Chaikin Volatility?
A: The default settings for Chaikin Volatility are a 10-period EMA and a 10-period smoothing. You can adjust these settings based on your trading strategy.
Q: How can Chaikin Volatility be used to improve trading?
A: Chaikin Volatility helps you identify periods of increasing or decreasing volatility, providing potential entry and exit points. It's useful for confirming trends and spotting reversals.
Strategies using Chaikin Volatility
None so far.
תגובות