OPEN-SOURCE SCRIPT
Scott’s ATR volatility histogram with smoothing
ATR shows volatility. The sma of the ATR (default=14 period) shows the average volatility over the look-back period, (default=200 period.)
When volatility is higher than average, the histogram turns green. When volatility is less than average, the histogram turns red. This shows volatility expansion and contraction. Volatility expansion is a good confirmation for entering a trade position. Volatility contraction is a sign that a trend is not developing.
Now I have added an sma which acts as a smoothing of expanding or contracting volatility. When the histogram is higher than this smoothing (default=21) then volatility expansion momentum is creasing. WWhen the histogram is lower than the smoothing sma, volatility contraction momentum is increasing.
I introduce an idea that volatility momentum can be used as a substitute for volatility expansion and contraction.
Now we have volatility expansion momentum and volatility contraction momentum.
When volatility is higher than average, the histogram turns green. When volatility is less than average, the histogram turns red. This shows volatility expansion and contraction. Volatility expansion is a good confirmation for entering a trade position. Volatility contraction is a sign that a trend is not developing.
Now I have added an sma which acts as a smoothing of expanding or contracting volatility. When the histogram is higher than this smoothing (default=21) then volatility expansion momentum is creasing. WWhen the histogram is lower than the smoothing sma, volatility contraction momentum is increasing.
I introduce an idea that volatility momentum can be used as a substitute for volatility expansion and contraction.
Now we have volatility expansion momentum and volatility contraction momentum.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.