The hourly volatility histogram (HVH)

ADR target bands | Big candles | Coloured moving average | Daily market heatmap | Day comparer | Day delineation | Displaced chart | Displaced moving average | Hikkake pattern | Hourly volatility histogram (HVH) | Inside bars or candles | Inventory retracement bar (IRB) | One day reversal pattern | Point in time | WL bars |

This tool allows traders to see when an instrument is most volatile. The most volatile periods of the day are the most interesting for traders. When there is movement, there are opportunities to make a profit. The HVH shows an instrument’s volatility per hour.

The advantages of the HVH tool:

  • Indicates the best time to trade.
  • Shows you the size of the volatility.
  • Can be used on every instrument.
  • Easy to use and easy to interpret.
  • FREE

The 24 bars of the histogram correspond to the 24 hours in a day. Each bar represents an hour from 0 (0:00-0:59) to 23 (23:00-23:59).

The blue colours are the main European hours, starting at 8:00.

The red colours are the main US hours, starting at 14:00.

This example shows the DOW index. The two most volatile hours are hour 15 (15:00-15:59) and hour 16 (16:00-16:59). The average volatility during these hours is currently 0,38% en 0,43% respectively. If the DOW is around 24.000, for example, this means the DOW moves on average 103 points during the 16th hour.

The DOW index

The calculation of the average volatility is done over a period of 240 trading days. The user can change this setting and should make sure he has loaded sufficient data.

This example shows the DAX index. Notice that currently the DAX has a higher average volatility than the DOW.

The DAX index

This example shows the Japanese NIKKEI index.

The NIKKEI index

The HVH can also be applied to other instruments such as forex pairs, bonds and individual stocks.

This example shows the German government bond Bund. Interestingly the Bund is at its most volatile when the US markets are open. Notice that the Bund trades from 8:00 to 22:00.

The German government bond Bund

This example shows Apple stock. Apple does not trade 24 hours per day. Hence there are only eight bars covering the US market hours. The first bar is bar 14 (14:00-14:59), which covers the pre-market.

The Apple stock

Practical implementation

Open the chart of an instrument. In the WHS Proposals folder, select the study Hourly Volatility Histogram.