Description:
Chaikin Volatility, developed by Marc Chaikin, is a technical analysis indicator that measures the spread between a security’s high and low prices over a specified period. It quantifies volatility by looking at the widening or narrowing of the range between the high and the low price. Traders and investors use this indicator to gauge market sentiment and identify potential market tops and bottoms.
Input Parameters:
- Length: Number of periods used in the calculation.
- Rate of Change (RoC): Calculates the percentage change in this indicator over a designated number of periods.
Use Cases:
- Identifying Market Tops/Bottoms: One of the primary uses of the Chaikin Volatility indicator is to help identify potential market tops. Market tops/bottoms can be accompanied by different volatility patterns, providing valuable insights into the market’s behavior.
- Entry/Exit Signals: Traders can also use the Chaikin Volatility indicator to generate entry and exit signals for trades. For instance, a trader might enter a long position when the indicator rises from a low value, suggesting that an increase in volatility could lead to a bullish price movement. Conversely, a trader might exit a long position or enter a short position when the indicator begins to fall from a high value, indicating a potential bearish reversal.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our Learning Center Article.