Installing and configuring – Dynamic Volatility Indicator

Volatility indicator on white chart

General – getting started

For ships at sea, the lighthouse flashing its constant signals is a warning of one thing – danger ahead. The Quantum Dynamic Volatility indicator is the traders lighthouse. It is warning of possible danger ahead, signalling extreme volatility in the market, and potential hazards for the unwary trader.

The trading indicator signals this volatility, using average true range. It is constantly scanning the price action for extremes, and when they arrive, are signalled on the chart with a purple arrow, above and below the candle or bar. This is a warning signal to stay out. What often happens following these periods of volatility is that the price action then retraces, and trades within the spread of the candle or bar. The reason for this is easy to understand. The market has moved sharply higher or lower on a news release. Excited traders then jump into the move, hoping for some easy money. The market makers then reverse the price action, leaving these traders trapped in weak positions.

This happens repeatedly and is the reason that the we developed the indicator. To signal these volatile bars and candles in realtime, and the associated warning to take care. Generally, once the signal is triggered, you will find the market moving back into the range of the bar or candle, before breaking higher or lower in due course. Once the price action has been validated by a clear move away and a close above or below, then it is safe to consider taking a position in the market once again.

The Quantum Dynamic Volatility indicator is sending a clear warning. It’s warning of high risk, and telling you to take care. The indicator paints two arrows, one above and one below the candle or bar.

The Quantum Dynamic Volatility indicator works in all timeframes from seconds and ticks to minutes and months.

Installation

Open your NinjaTrader platform and select a chart

  • Right click 

This will open the following window:

Screen Shot 2014-08-11 at 20.01.17
  •  Left click > Indicators

This will open the following window: (you can also open this window in another way by clicking on the Indicators icon in the NinjaTrader toolbar)

Volatility indicator adding

Scroll down to the QuantumDynamicVolatility indicator:

  • Left click > This will highlight the indicator in blue
  • Left click > ‘New’ button as shown above

This will add the QuantumDynamicVolatility indicator in the box below as shown here:

Volatility indcator now installed

Before clicking the OK or Apply button to complete, the indicator has one or two options which can be configured. You can click the Apply button at any time, and this will apply any changes you have made to the indicator, without closing the window. This will allow you to see the changes you have made, and to modify again before closing with the OK button, or the Close button.

All of the user configuration is done on the right hand side of the above screen, which is shown enlarged below. These are the default settings when you first install the indicator to a chart.

Settings for volatility

Parameters

These are the Parameters inputs:

Offset – this adjusts the vertical distance of the purple triangle from the candle of bar. The default is 10 but you can change this to suit your own personal preference. A higher number will move it further way, whilst a lower number will move it closer. To change the offset value:

  • Left click on the Offset label, and then left click in the value field. Use the back space to remove or edit the setting, and enter a new number to move the pivots closer or further away. The base unit is 10, so a value of 20 will double the current distance approximately, and 40 will move it 4 times the default distance.

Data

These are the Data inputs:

Calculate on bar close – please DO NOT change this setting and leave as the default of True

Input series – this shows the timeframe for the indicator and will be displayed according to the chart time. In this case the indicator was attached to a 15 min chart for the $EURUSD

Maximum bars look back – this is the maximum number of bars in the look back for the indicator. We suggest you leave this as the default of TwoHundredFiftySix as it is memory friendly

Visual

These are the Visual inputs:

Auto ScaleDO NOT change this setting and leave this as the default of True

DisplacementDO NOT change this setting and leave this at the default of 0

Display in Data Box – we suggest you leave this at the default of True

Label – this is the label which will display on the chart once the indicator is attached. You can remove this if you wish as follows:

  • Place your mouse on the Label label, and left click. This will highlight Label in blue. Left click in the value field alongside and your cursor will appear. Delete the text using the back button and when you apply the indicator, the text will no longer be displayed

Panel – this specifies the panel number where the indicator will appear. We suggest you leave this as the default of ‘Same as input series’

Price Marker(s) – please DO NOT alter this setting and leave as the default of True

Scale Justification – please DO NOT alter this setting and leave as the default of Right

Plots

This is where you can change the color and style of the indicator. Both the WideRangeBottom and the WideRangeTop are changed in exactly the same way. For simplicity we have only shown one example here, as the other is identical.

WideRangeTop – to access the settings, left click on the WideRangeTop label which will then turn blue. Left click on the + icon and the following options will then be displayed:

Changing volatility settings

As you can see here, the default setting is a magenta TriangleUp, Solid and 5px  as shown alongside the label field. These can be changed as follows:

Color – to change the color left click on the Color label which will turn blue. A drop down arrow will appear in the value field. Left click the drop down arrow and the color options will then be displayed. Use the scroller on the right to select your preferred color which will then appear in the value field alongside.

Dash style – this has NO effect with this indicator

Plot style – to change the style of the indicator, left click on the Value label which will turn blue. A drop down arrow will appear in the value field. Left click the drop down arrow and the plot style options will then be displayed. Use the scroller on the right to select your preferred style which will then appear in the value field alongside

Width – to change the size of the pivot, left click on the Width label which will turn blue. Left click the value field alongside and use the back space key to delete the existing value, and replace with a new value. The default is 5px, and any number higher than this will then increase the size of the indicator, whilst a lower number will decrease the size. You do not need to enter ‘px’ after the number. Simply enter a whole number to change the size of the indicator to your preferred appearance

Once you have made all the changes to the settings for the Quantum Dynamic Volatility indicator left click the OK button to complete and update the indicator.

Removing an indicator

These are the steps to remove a NinjaTrader indicator from a chart:

Right click on the chart and then left click on Indicators from the pop up menu. Scroll down to the indicator you wish to remove and left click which will turn the indicator blue. This will then display the indicator window with its settings as shown below:

Remove volatility indicator from chart

Simply left click on the Remove button as shown above, and the trading indicator will disappear from the list of indicators on the chart. To confirm left click the OK button to confirm and close the window.