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).

Microsoft Volatility Ratio

Mouse over chart captions to display trading signals.

Wide ranging days are signaled by a Volatility Ratio greater than 2.0

  1. A wide-ranging day signals a likely reversal.
  2. Price gaps sharply upward.
  3. A downward gap signals the completion of an island cluster reversal, formed by [2] and [3].


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

EMA = exponential moving average

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.
True Range