Overview

For ships at sea, the lighthouse flashing its constant signals is a warning of one thing – danger ahead. The Quantum Dynamic Volatility indicator is the trader’s lighthouse. It is warning of possible danger ahead, signalling extreme volatility in the market, and potential hazards for the unwary trader.

The trading indicator signals this volatility, using average true range. It is constantly scanning the price action for extremes, and when they arrive, are signaled on the chart with a purple triangle, above and below the candle or bar. This is a warning signal to stay out. What often happens following these periods of volatility is the price action retraces, and trades within the spread of the candle or bar. The reason for this is easy to understand. The market has moved sharply higher or lower on a news release. Excited traders jump into the move, hoping for some easy money. The market makers then reverse the price action, leaving these traders trapped in weak positions.

This happens repeatedly and is the reason we developed the indicator. To signal these volatile moves in realtime, and the associated warning to take care. Generally, once the signal is triggered, you will find the market moving back into the range of the bar or candle, before breaking higher or lower in due course. Once the price action has been validated by a clear move away and a close above or below, then it’s safe to consider taking a position in the market once again. If you’re in a position, it may be time to close. If you’re not in the market, it’s time to be patient and wait.

The Quantum Dynamic Volatility indicator is sending a clear warning. It’s warning of high risk, and telling you to take care. The indicator paints two triangles, one above and one below the candle or bar.

The Quantum Dynamic Volatility indicator works in all timeframes.

Format

By clicking the indicator’s Format button, you can configure the Quantum Dynamic Volatility Indicator’s inputs and style according to your preferences. The Format button appears as a small cog/gear icon beside the name of the indicator at the chart. Clicking the button shows a dialog box for configuring the Inputs and Style options.

Inputs

Sensitivity

This is set to 3 by default but by increasing the value of this setting, the indicator becomes more sensitive to identifying bars that exhibit volatility.

Style

TradingView allows you to customize the indicator’s appearance by changing the properties of each of its plots/lines.

Volatility (1)

This is a plot that marks a volatile candlestick with a triangle shape.

  • Visible by default, you can untick the checkbox beside its name to hide this line in the chart.
  • Color is set to magenta. You can click the color box to choose another color from a palette.
  • Plot symbol is set to Triangle Down by default but you are free to choose other symbols available in the drop-down list.
  • Plot position default is set to Below Bar.

Volatility (2)

This is a plot that marks a volatile candlestick with a triangle shape.

  • Visible by default, you can untick the checkbox beside its name to hide this line in the chart.
  • Color is set to magenta. You can click the color box to choose another color from a palette.
  • Plot symbol is set to Triangle Up by default but you are free to choose other symbols available in the drop-down list.
  • Plot position default is set to Above Bar.

Precision

This determines the number of decimal places the indicator uses to display the current value of its lines. You can adjust this by choosing from a drop-down list but it is not useful to this indicator.

Scale

You can choose either Pin to Right or Pin to Left.

  • Pin to Right is the default option. This displays the indicator labels at the right-hand side of the indicator.
  • Pin to Left displays the indicator labels at the left-hand side of the indicator.