A volatility indicator that shows, as a % change, how much the gap between each candle’s high and low has been widening (or narrowing) lately.
- Weapon tier
- Standard
- Slots used
- Sub-charts 1/2
- Created by
- Marc Chaikin
Concept
One line is drawn in a lower panel. For each candle it measures “high − low”, the range the price covered that day, and shows how many % the exponential average of that range has grown compared with 10 candles ago.
Above 0, candles are getting wider than before; below 0, they are getting narrower. It does not say whether the price will rise or fall. It is a tool for seeing how strongly the price has started to swing.
- Chaikin Volatility
Charts by TradingView Lightweight Charts™
80 candles with volume, and the Chaikin Volatility line in a lower panel. For most of the early part the candles are small and the line stays near or below 0. At the yellow vertical line (candle 60) the line moves above 0, and right after that large candles and heavy volume appear, the line shoots up and then comes back down. Keyboard: ←/→ to move, +/− to zoom, 0 to see the whole chart.
The line shooting up only means the candles got bigger, not that the price will rise. This chart was picked because the price rose afterwards; the same shape is often followed by a big fall. Drag the chart sideways with a finger or the mouse to move it, and pinch with two fingers to zoom in. With a keyboard, click the chart, then use ←/→ to move and +/− to zoom.
How it is calculated
For each candle, take high − low. The close is not used.
Take the 10-candle exponential average of that range. Recent candles weigh more.
Chaikin Volatility = (average now − average 10 candles ago) ÷ average 10 candles ago × 100. If the average range doubles it reads 100; if it halves it reads −50.
Parameters
| What it sets | Name in the game | Default | Range |
|---|---|---|---|
| Candles used to average the range (exponential) | emaPeriod | 10 | 2 – 100 |
| How many candles back to compare with | rocPeriod | 10 | 1 – 100 |
Trading ideas
Expansion after calm: when the line stays below 0 for a long time (candles keep shrinking) and then moves above 0, it is commonly read as “the price has started to move”. The chart on this page shows that scene. Which way it moved has to be read separately, from the candle colours and the trend (lesson 2).
Spotting panic: some traders read a big spike at the end of a long fall as a place where panic selling piled up. That alone is not taken as a bottom.
Common traps
- It does not tell you the direction. Reading a rising line as “the price will rise” can hurt badly in a fall.
- One unusually large candle keeps the line high for the next 10 candles, so a single swing lingers.
- None of these are sure signals. Read them together with the trend and volume.
In the game
- “Chaikin Volatility” is a “Standard” weapon and uses 1 of the “Sub-charts” panels (limit 2). Volume in the starting setup already uses 1, so adding it brings it to 2 (0 left).
- When the line goes below 0 somewhere on screen, a dotted zero line is drawn in the panel.
Related indicators and lessons
- Bollinger Bands — An indicator that uses three lines, a moving average in the middle and a band above and below it, to show how much the price is swinging compared with usual.
- ATR — An indicator that shows, in price units, how much a single candle usually moves. It does not say which way; it only measures the size of the swings.
- Envelope — An indicator that draws lines a “fixed percentage” above and below a moving average, to show how far the price has moved away from the average.
- Keltner Channels — An indicator that puts an exponential moving average in the middle and draws two lines above and below it, set apart by the usual daily range (ATR), to show the price’s “normal range”.
- Donchian Channel — An indicator that traces the highest and lowest prices of a recent period, showing the moment the price leaves its “range so far”.
- Standard Deviation — An indicator that shows, as a single number, how widely recent closes are scattered around their average. The larger it is, the harder the price is swinging.
- 1. Reading a single candle
- 2. Trends and sideways moves