Pre-Volatility Indicators

Discussion in 'Technical Analysis' started by JSSPMK, Feb 23, 2007.

  1. Does anyone have any useful info on analyses of pre-volatility times? I only use charts and have not come across yet anything that can establish probability of extensions of daily range. I don't use volume, does anyone use volume analyses for that purpose? My aim is not to scalp, but to try and stay in the market, not easy to do when range is manipulated.

    Thank you.
  2. Does anybody actually try to successfully estimate volatility range before event taking place? I find it odd that there have been no replies so far. So many people complain about their inability to trade narrow range, though nothing's been posted so far on trying to assert periods before directional volatility might increase.
  3. Try rephrasing your question because it seems very confusing to me especially since I do a ton of Volatlity Analysis and I don't even use volume.

    I'm a price action only trader (no indicators).

    * What do you mean by before event taking place???

    I just need a little more clarification about your question because there's already been lots of info posted at ET about volatility analysis.

    By the way...

    Yes you can estimate volatility with high probability prior to the market Opening or prior to key market events.

    However, that also implies you aren't going to be correct every time...just most of the time.

    P.S. The Eurex DAX is one of my key markes I monitor very closely as I trade CME Emini ER2.

  4. Although I mainly trade DAX I look at all major world indices EOD data to establish correlated TA patterns, sometimes the times of increased volatility can be 'predicted' if same signal is present across the globe. I was expecting a directional volatility to kick in yesterday, it happened today. I was looking at a divergence in one of the indicators & price, it was present in quite a few major indices.

    So I was wondering what do others use to zoom in on the time frame when markets are most likely to take off. I guess that's what I meant to say.
  5. Hi JSSPMK,

    Sounds like your doing a lot of Intermarket Analysis.

    There are many aspects of Volatility Analysis and I'll just mention the two I'm very familiar with:

    * Declining volatility will often produce a volatility spike...applicable on any chart frame.

    * Historical data to see market seasonal tendencies (cycles) of volatility.

    Thus, you will know what to expect via the tendency of which days, weeks or months of your trading instrument involving volatility...

    Very useful information for position size management.

    For example, if you know when your trading instrument tends to have one of the following:

    * Low Volatility

    * Declining volatility

    * Volatility that lacks peaks or valleys (big hint that your trading in range bound price action or choppy price action).

    You'll know when to lower your position size to better manage the increased risk exposure of trading in such market conditions.