Volatility Quality Zero Line Indicator

Volatility Indicators aid in determining the times when a particular stock or market as a whole is more volatile. Traders can use such indicators to analyze these periods and determine whether there is high or low volatility in the market. This guide is going to introduce you to the Volatility Quality Zero Line Indicator, including a brief description of its buy-sell rules with MT4 chart examples.

What is the Volatility Quality Zero Line Indicator?

The Volatility Quality Zero Line Indicator determines market volatility and helps identify changes in market trends. It closely tracks the diversities in market volatilities, enabling you to trade within the correct market momentum.

The indicator is a variant of Thomas Stridsman’s invention. The latest version is less sensitive and more resistant to false price breakouts. It derives its values from a Weighted Moving Average’s Open, High, Low, and Close values. You can use it to assess price volatility levels and determine market bias simultaneously. On the downside, the indicator may take time to respond to changes in price.

The rate of a stock price rise and fall over a specific time period is known as volatility. Increased risk is frequently associated with higher stock price volatility, which also aids investors in forecasting potential future trend reversal zones.

Volatility Quality Zero Line Indicator Chart Example
Volatility Quality Zero Line Indicator Chart Example

Volatility Quality Zero Line Trading Strategy

When the market is experiencing bullish conditions, the volatility line on the forex indicator turns green. The volatility line also becomes red when the market is under bearish conditions. Accordingly, you can trade the market long when the line changes from red to green and short when the line changes from green to red.

Buy Signal

Here are the buy entry rules of the Volatility Quality Zero Line Indicator:

  • The volatility line turns green and moves above zero level.
  • The price exceeds a significant resistance or rejects support.
  • Hold buy positions till the Volatility Quality value remains positive.
  • Take profit once the volatility line turns red and drops below zero.
Volatility Quality Zero Line Indicator Buy Signal
Volatility Quality Zero Line Indicator Buy Signal

Sell Signal

Here are the sell entry rules of the Volatility Quality Zero Line Indicator:

  • The volatility line turns red and moves below zero level.
  • The price breaks solid support or rejects resistance.
  • Hold sell positions till the Volatility Quality value remains negative.
  • Take profit once the volatility line turns green and moves above zero.
Volatility Quality Zero Line Indicator Sell Signal
Volatility Quality Zero Line Indicator Sell Signal

Volatility Quality Zero Line Indicator Pros & Cons

Pros

  • The Volatility Quality Zero Line Indicator clearly demonstrates price volatility conditions.
  • Determines current market trends and signals potential trend reversals.
  • Ideally suits trend-following trading strategies.
  • Helps identify weak trend signals.
  • Applicable to multi-timeframes of MT4 charts.

Cons

  • The Volatility Quality Zero Line signals may not work in choppy markets.
  • It may generate late confirmation during sluggish price trends.

Conclusion

A significant advantage can be gained over the other forex traders by keeping an eye on the market’s volatility as you trade because you will be aware of the ideal market conditions for using this forex indicator. I also advise combining this indicator with the RSI and MACD momentum signals for better results.

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