AG Relative BandWidth
This is an indicator that we've been using for a while, very useful for identifying when the market is in a low volatility state. We use the bandwidth of the Bollinger Bands as a proxy for this, but we do something different - we ask the question of "relative to what?".
Whereas typical Bollinger BandWidth indicators give values only applicable for that particular asset, the normalised nature of our Relative BandWidth indicator means that it works and be inferred the same across all assets and timeframes. A really handy tool!
"After periods of low volatility come periods of high volatility" is a well-known theory, and this indicator helps to quickly and easily identify when markets are in low volatility states. Another name for the information our indicator shows is known as the "Bollinger squeeze". Trading breakouts of this squeeze in Bands can be a profitable strategy, given one can filter the false breakouts adequately.
I have shown examples of when the indicator was showing low volatility, take note of what the price action and the width of the Bollinger Bands are doing.
Every parameter is editable, so feel free to play around with the settings. The default settings are what we have used for a long time and have worked well.
Whereas typical Bollinger BandWidth indicators give values only applicable for that particular asset, the normalised nature of our Relative BandWidth indicator means that it works and be inferred the same across all assets and timeframes. A really handy tool!
"After periods of low volatility come periods of high volatility" is a well-known theory, and this indicator helps to quickly and easily identify when markets are in low volatility states. Another name for the information our indicator shows is known as the "Bollinger squeeze". Trading breakouts of this squeeze in Bands can be a profitable strategy, given one can filter the false breakouts adequately.
I have shown examples of when the indicator was showing low volatility, take note of what the price action and the width of the Bollinger Bands are doing.
Every parameter is editable, so feel free to play around with the settings. The default settings are what we have used for a long time and have worked well.