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Only when the price of an instrument is volatile, profits (but also losses) can be made. Given the importance of volatility, tools and indicators, which measure volatility, are among the most widely-used by traders. One popular indicator is the Average True Range (ATR) indicator created by J. Welles Wilder.
The Volatility Blocker (VB) goes beyond simply measuring volatility. The VB not only indicates the size of the volatility but it also shows if volatility is increasing or decreasing. The VB can also automatically block trading signals, hence the name Volatility Blocker.
These are the advantages of the Volatility Blocker tool:
The Volatility Blocker uses a fast and a slow ATR. Uniquely these two lines are plotted together in a single chart. When the fast ATR (blue line) is above the slow ATR (magenta line) the volatility is on the increase. This is interesting information for the trader when he is considering opening a position. Opening a position when volatility decreases makes it harder to make a profit.
This example shows the DAX. Volatility is at its lowest in the hour before the US markets open. The trader can see the volatility in points, ticks or percent.
This example shows Gold. Volatility remains high during the whole day.
In NanoTrader Full the VB can automatically block new signals when volatility is too low (purple background in the chart).
Open the chart of the instrument you wish to trade. In the WHS Proposals folder, select the study Volatility Blocker.