Volatility Ratio (Schwager)
This ratio is similar to one used by Jack Schwager in Technical Analysis to identify wide-ranging days.
Microsoft Corporation with 14-day Volatility Ratio (VR).
Mouse over chart captions to display trading signals.
Wide ranging days are signaled by a Volatility Ratio greater than 2.0
- A wide-ranging day signals a likely reversal.
- Price gaps sharply upward.
- A downward gap signals the completion of an island cluster reversal, formed by  and .
The default period for Volatility Ratio is 14 days. To alter the default settings - Edit Indicator Settings.
See Indicator Panel for directions on how to set up the indicator.
Volatility Ratio = True Range / EMA of True Range for the past n periods
True Range is the greater of:
- The day's High minus the Low;
- Today's High minus yesterday's Close; and
- Yesterday's Close minus today's Low.