The most accurate indicator in volatility period in stocks trading


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During volatility periods in stocks trading, the most accurate indicator is often a combination of indicators rather than a single indicator. Here are some of the most effective indicators for measuring volatility:
- Bollinger Bands: Bollinger Bands are a set of three lines plotted around a simple moving average, with the outer bands indicating standard deviation levels. When the bands expand, it indicates increased volatility, and when they contract, it suggests low volatility12.
- Average True Range (ATR): The Average True Range (ATR) indicator is a measure of the average range of price movement over a given period. It is calculated by taking the average of the true ranges for each period and provides a numerical value for volatility13.
- Cboe Volatility Index (VIX): The Cboe Volatility Index (VIX) is a widely watched gauge of market volatility. It is computed using an option-pricing model and reflects the current implied or expected volatility that is priced into a strip of short-term S&P 500 Index options1.
- Keltner Channel Indicator: The Keltner Channel Indicator is a volatility indicator that consists of an upper band, lower band, and a moving average. The distance between the bands changes based on the volatility of the underlying security4.
- Donchian Channel: The Donchian Channel is a volatility indicator that consists of an upper band, lower band, and a moving average. It is named after its creator, Richard Donchian, and is particularly useful for highlighting volatility in the market4.
By combining these indicators, traders can gain a more comprehensive understanding of volatility periods in stocks trading. It's important to remember that no single indicator is 100% accurate, and traders should always use additional confirmation and analysis before making trading decisions.
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