Volatility Ratio 2 Indicator

Volatility Ratio 2 Indicator

An ideal Volatility Ratio 2 indicator that gives buy and sell signals based on the average true range.

If you are a breakout trader, the Volatility Ratio 2 indicator for MT5 will suit you. The indicator defines a trading range and gives you a signal of an impending price breakout. The inductor uses the following formula to determine the volatility rating.

Today’s true range / N days true range

The true range is determined by using the high of today’s high and yesterday’s close minus the low of today’s low and yesterday’s close. You can use the indicator to trade any instrument and any time frame.

How to Trade Using the Volatility Ratio 2 Indicator for MT5
The whole idea of using this indicator is to determine when the price is out of the true range. This is a sign of a possible reversal. Essentially, it identifies instances where the market has broken through a price range, which represents a significant breakout. The signal is given with a value of 0.5, but different traders use different values depending on market conditions.

Ideally, level 2 indicates that the true angle is twice the previous true range. You can also use other indicators such as volume to confirm a breakout signal as volume increases after a breakout.

Trading example

The figure shows the movement of the UK price against the US dollar. The indicator gives a buy signal by placing a blue dot on the indicator and a blue arrow in the price movement. Similarly, a red arrow means a sell signal. Just buy when the blue arrow and dot form on the price action and indicator.

Conclusion
A volatility factor of 2 is an ideal indicator based on true range. It gives signals by placing an arrow on the chart. You simply enter when the market matches the color of the arrow. This is a great addition to your trading strategy.