The difference between Mr. Black and I is that he's using the ATR indicator. In contrast, I only use price itself (no indicators) for volatility analysis. Volatility Analysis is similar to Volume Analysis except for one big thing that's problematic for volume analysis and not problematic for volatility analysis... Price that moves strongly or trends on low volume or declining volume usually leave traders scratching their heads about how to trade that market environment... A type of price action that's very common in futures or forex (I don't know about stocks). In contrast, volatility analysis doesn't have a problem with the above type of price action. Simply, traders can still understand and exploit the changes in supply/demand regardless if its low volatility, normal volatility or high volatility trading conditions. As to your question... So where (please) do I go to acquire this knowledge? A lot of screen time as in many months or years. However, you can shorten the learning curve via trying to find answers to the following questions (I'm giving some clues here): All the below do have answers...obvious to some traders and not so obvious to other traders * What caused most of those wide range intervals that represent volatility spikes in your trading instruments? * What's the relationship between contracting volatility and expanding volatility to price movement itself? * How do you derive support/resistance zones (not levels) via volatility analysis? The above should keep you busy for a very long time and when you can answer those questions you'll be on your way to a type of price action only trading that provides a wealth of info (exploitable) about changes in supply/demand. In addition, as you gain more knowledge about volatility analysis you'll have a better understanding of position size management, initial stop/loss placements, trailing stop placements, profit targets, when to scale and when not to scale et cetera. Have fun and good trading. Mark
1. Increased effort to buy or sell finding increased willingness to sell or buy. 2. Expansion or contraction cause price movement. They are price movement. 3. By mapping the outer limits of like-level intervals on the supply side and the demand side, to create a visual channel - volatility 'trendlines'. I'll start with that. Thanks for taking the time to help.
When you say 'collect data sets', you mean 'group together significant volatility sets'? As on your ATR example provided? In stocks one would be looking for divergence (or anomalies) between volume and spread, but that doesn't really happen with volatility, does it? So how do you determine these ATR groupings? Why isn't the last bar of your middle group (R), the first bar of your third group (G)? Just trying to understand