What it does
This study plots a smoothed measure of the market's true range — effectively an ATR-style volatility line that averages the greatest of (high-low), (high-previous close) and (previous close-low) over a lookback period. It tracks how much the instrument typically moves per bar, including gaps. Values are in price units, so bigger numbers simply mean bigger average moves.
Typedraws on the price chart
How to add it
Click Indicators (ƒx) in the header.
Search “Volatility Index” and click the result.
Hover its legend row and click the gear to open settings.
How traders use it
- Use it to size stops and targets: placing stops a multiple (commonly 1.5-3x) of current volatility away keeps them outside normal noise.
- Rising volatility with a price breakout validates the move; a breakout on flat volatility is more likely to fail.
- Volatility spikes frequently accompany capitulation lows; extremely low, declining readings mark complacency and often precede expansions.
- Reduce position size when the reading is high and increase it when low to keep risk per trade roughly constant.
- Compare the current value to its own recent range rather than across symbols, since it is denominated in price.
Inputs
| Input | Type | Default | Range / Options |
|---|---|---|---|
| Periods | number | 7 | 1–2000 |
| ATR Mult | number | 3 | 0.1–100 |
| Method | select | Exponential | Exponential / Wilder Smoothing |
Plots & styling
| Plot | Style | Default color |
|---|---|---|
| Plot | line | #FF5252 |
Every plot's color, line width and visibility can be changed on the Style tab. Precision, price-scale labels and status-line values are configurable at the bottom of the Style tab.
Tips
- Drag the indicator to its own pane from the legend ⋯ menu if it crowds the price chart.
- Double-click any of its lines to jump straight into the settings dialog.
- Save the configured chart as a study template (Indicators menu) to reapply this exact setup elsewhere.
Watch out for
- It is direction-blind: high volatility says nothing about whether the market goes up or down.
- As a lagging average it responds slowly, understating risk right after a sudden regime change.