Here's an indicator I use to help project what the future volatility is going to be--so I have some clue as to whether price will move sufficiently to make lots of dollars. I call the indicator "bollinger bands on bollinger band width". Its four formulas. What is does is measure the width of the bollinger bands drawn on price. It then draws bollinger bands for the width line--so you have an idea when the bollinger bands are at their narrowest point or their widest point. Narrowest means upcoming price volatility and wide means upcoming consolidation/decreased volatility. This indicator has helped me greatly stay away from trading situations where the price isn't going to move a lot one way or the other. Its also helped me write covered calls and buy calls and puts.
FORMULA ONE:
mov((mov(c,peri,s)+std(c,peri,2)-(mov(c,peri,s)-std(c,peri,2)))/mov(c,peri,s),peri,s)+ std((mov(c,peri,s)+std(c,peri,2)-(mov(c,peri,s)-std(c,peri,2)))/mov(c,peri,s),peri,1.5)
FORMULA TWO: mov(c,peri,s)+std(c,peri,2)-(mov(c,peri,s)-std(c,peri,2)))/mov(c,peri,s)
FORMULA THREE:
mov((mov(c,peri,s)+std(c,peri,2)-(mov(c,peri,s)-std(c,peri,2)))/mov(c,peri,s),peri,s)- std((mov(c,peri,s)+std(c,peri,2)-(mov(c,peri,s)-std(c,peri,2)))/mov(c,peri,s),peri,1.5)
FORMULA FOUR:
mov((mov(c,peri,s)+std(c,peri,2)-(mov(c,peri,s)-std(c,peri,2)))/mov(c,peri,s),peri,s) |
