Description of Volume Volatility Indicator

Volume Volatility is an indicator which analyzes currency pairs, indices, commodities etc. in terms of extremely high and extremely low accumulation to distribution ratio in comparison to values from past.

The most important parameter is “Volume_Volatility_Factor” – this parameter, in big simplification, determines how distant past is analyzed. So, the lower value of the parameter, the indicator analyzes less data from the past. I recommend you to set and test 3, 5, 15, 35, and 48 with different timeframes and currency pairs.

Next parameter is “Signals” with which we can filter signals to show.

0: Every,
1: Only with trend,
2: Only counter-trend.

Trend is recognized using two moving averages (MA1 and MA2). If faster MA1 is above slower MA2 – trend is upward, if MA1 is below MA2 – trend is downward.

Another parameter “Room_to_the_left” allows to determine if price is in Supply and Demand Zone by setting number of bars to the left on chart in which the price was not so high (with signals to sell) or so low (with signals to buy). This parameter allows filtering many bad signals which do not indicate retracements or reversals.

Next parameter is “Filter”, which you can use to filter signals with one of the following methods.

0: Off,
1: RSI (default),
2: CCI,
3: MFI,
4: ADX.

Another parameters refer to filters. We can set the period for each filter and level (for first three filters: above higher and below lower levels we get signals). “RSI_Level” is lower level and higher level is 100-“RSI_Level”. For CCI higher level is “CCI_Level” and lower is “CCI_Level”. For MFI, “MFI_Level” is lower level and 100-“MFI_Level” is higher level. ADX has only one level and signals come above “ADX_Level”.

Each signal as a green bar (meaning that you can search opportunity to buy) or red bar (sell) on indicator window may have values from 1 to 10. Value 10 means the highest impact and the highest probability to change the trend, value 1 – the smallest. Sometimes, small bars are enough to reveal trend retracement or reversal and often are forecast of big bars. If after big (and also small) bars is a Price Action pattern as Doji/Pinbar or Engulfing pattern it’s good opportunity to consider entering the trade. Likewise, if the signal appears in the zone of a strong support or resistance zone from past it’s always good opportunity to trade.

Volume Volatility can recognize volume extremes which often lead to reverse of trend or retracements. Using well-chosen and tuned filters we can eliminate a lot of bad signals to make very high-probability system.

Remember to be always careful when important political and macro-economic messages are published, when price oscillates around important support and resistance levels, pivots or round numbers and obviously always pay special attention to price action. It is also very important to check trend on a higher timeframe before enter the market.

Product is available here: https://www.mql5.com/en/market/product/15357

Any opinions, ideas and comments are welcome!

Good luck in trading!