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Creator: Marc Chaikin
Period: 10
Average Period: 10
In the Chaikin Volatility indicator, two lines are plotted below the chart.
1 – Green line represents Chaikin Volatility
2 – Red line represents the Average
As the name suggests, it is a volatility-based indicator. The spread is the difference between the high and low points. Widening ranges between high and low prices indicate an increase in volatility.
A higher indicator value indicates that intraday prices have a wide range between highs and lows. The low indicator values suggest that intraday prices have a relatively constant range from high to low.
Over a short period of time, if a price increases with an increase in volatility, it indicates that traders are nervous and indecisive. Price increases with declining volatility over a longer period indicate a maturing bull run.
A price decrease accompanied by a decrease in the volatility indicator line over a longer period of time indicates disinterested traders. Price declines with increasing volatility over a relatively short period of time, indicating a panic sell-off.
The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.
This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.
The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.