The Volatility Step Channel Indicator For MT4
Table Of Contents:
- The Volatility Step Channel Indicator For MT4
- Everything you need to know about volatility
- Advantages of the Volatility Step Channel Indicator For MT4
The Volatility Step Channel Indicator For MT4 is an awesome indicator which helps you to identify market volatility and trade it accordingly. Volatility is easily one of the most important factors that influence the market. This means that its obviously great to know about it and letting it help you find good trade entries. The indicator displays the volatility in a convenient and easy to understand way.
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In this article you will first learn what volatility is and how you can use it in your daily trading. Afterwards I will tell you about the best ways to use the Volatility Step Channel Indicator For MT4 and what advantages it brings to your trading.
Everything you need to know about volatility
Like I briefly stated above, volatility is one of the most important factors on the price movement of any instrument. It is often seen as a degree of variation in the market price. Volatility is typically measured by the standard deviation of the return.
As you can see in the image at the start of the article, there is a second indicator at the bottom of the chart. This indicator is called “base volatility”. This indicator calculates the Moving Average of the standard deviation of 10 and plots the results as a line. With this line we can measure and see the current market volatility. The further away the line is from the zero mark, the more volatile the market is.
The Volatility Step Channel Indicator For MT4 is also based on the base volatility indicator and uses it to define its channel.
While the most volatile periods in the market are sometimes considered the most risky ones, they at the same time provide the most movement and thus many trade opportunities and the great potential for large wins in a short amount of time. Volatility is especially important for scalpers, since they usually are the ones that are most dependent on volatile markets to make quick profits and get in and out of the market in a short amount of time.
Advantages of the Volatility Step Channel Indicator For MT4
As you probably understand by now, volatility is very important for many traders. The Volatility Step Channel Indicator For MT4 can help you to easily spot the most volatile moments and use them to your advantage. The indicator can at the same time be used for finding trade entries and exits as well.
If you want to use the Volatility Step Channel Indicator For MT4 for entering the market, you can for example use it like many people use the popular Bollinger bands indicator. You wait for price to overshoot the channel of the indicator in either direction. Once you spot such an overshoot setup, you can now place your order and trade the movement back to the middle line of the channel or even to the other side of the channel, depending on your trading style.
If you combine this strategy with the base volatility indicator or any other indicator, you will get some really good results. You can see some example trades with this strategy in the picture above. We only enter trades when the channel of the Volatility Step Channel Indicator For MT4 get overshoot AND the base volatility indicator is showing rather high values. This way we can filter out bad trades and only trade those that have high quality and the best chance of winning.
The strategy that I showed you above is only one example of the many possibilities that the Volatility Step Channel Indicator For MT4 provides. You can combine it with any of your already existing strategies and also add it to your scalping strategies. This way you can hugely improve your entries and experience less drawdown that not only nervous but also force you to make mistakes.
