Volatility vs Range Indicator MT4 | MT5

The Volatility vs Range indicator is designed to provide traders with insights into market conditions by analyzing volatility relative to the trading range. It calculates the ATR and compares it with the difference between the highest and lowest prices over a selected period:

• V/R = ATR(n) / [High(n) - Low(n)]

Where;  *V/R: volatility vs range ratio

              *ATR(n): Average True Range over n periods

              *High(n) and low(n): Highest and lowest price over n periods

Furthermore, this indicator helps traders filter out false breakouts and identify high-probability trade setups, to make informed trade decisions.

• Trend strength:

- A higher ratio suggested increased volatility, often signaling stronger price movement.

- A lower ratio indicated a lack of real momentum, possibly signaling sideways markets.

• Avoiding false breakouts:

- If the price moves significantly, while the indicator remains low, it suggests a false breakout.

• Setting Stop-Loss and Take-Profit:

- When the volatility is high, widen SL levels to avoid getting stopped too soon, and expand TP levels to maximize profit potential in volatile conditions.

- When the volatility is low, tighten SL levels to manage risk efficiently and ensure that potential profits are twice the risk taken. Avoid aiming for large profits in this situation.

To sum up, these features make the Volatility vs Range a valuable indicator for determining optimal entry and exit points, improving trading strategies, and enhancing trade timing.

1- In the first trading example, as shown on the MT4 chart, a low volatility market condition signals a sideways trend. When the indicator rises, suggesting a potential breakout, and with the appearance of a bullish candle, confirming the upward trend. 

Furthermore, the volatility range indicator displays support and resistance levels, and when the price reaches the top, and with a high volatility condition, all of all conditions, signal a potential breakdown and a potential selling opportunity for the trader.

 2- In the second trading example, as presented on the MT5 chart, a consolidation phase is identified using the volatility vs range indicator, which indicates a low volatility condition. Traders could, in this case, make some profit by selling near the last resistance of the sideways trend and buying near the support line. 

When the indicator rises, suggesting a potential breakout. The appearance of a bullish candle signals a bullish movement, providing traders with a strong buying opportunity.