HOW TO TRADE WITH CHAIKIN'S VOLATILITY TECHNICAL INDICATOR
Chaikin's Volatility indicator works as other volatility indicators do. It moves like an oscillator, but does not indicates over sold and over bought situations rather indicates the increase and decrease in volatility. Volatility indicators are widely used by traders. This post explains the way of trading with Chaikin's Volatility indicator.
While trading with the Chaikin's Volatility indicator, traders should focus on the following key points:
- Increase in volatility can either increase or decrease the price.
- Decrease in volatility can either increase or decrease the price.
- When price increases with the increase in volatility, it is usual, and the decrease of volatility can introduce a bearish trend.
- When price increases with the decrease of volatility, that means the trend reaches to a top.
- When price decreases with the increase in volatility, it is usual, and the decrease of volatility can introduce a bullish trend.
- When price decreases with the increase of volatility, that means the trend reaches to a bottom.
- Increase in volatility during a pattern breakout signals the reliability of the breakout.
These are the basic techniques of trading with Chakin's Volatility indicator, but my trading technique with this indicator is different. I named my trading technique with this indicator is Volatility Cycle Signal. I found this technique very effective. First question is "How a volatility cycle is completed?"
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- Volatility up - price up - volatility down - price up
- Volatility down - price down - volatility up - price down
- Volatility down - price up- volatility up - price up
- Volatility up - price down - volatility down - price down
Dear Traders, if you like this post please share with others. You can join the discussion with other traders, dropping a comment below.
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