How do you determine the volatility of a pair? low,med or high

Sed, I find this volatmeter coded by Damiani very helpful.
I'm not on my main PC at this moment where I have information stored about it but you could try to google or visit this thread

Hope that helps

there is some important classical rules of determining win/reward ratio, sl, tp, b/even, mm - in next thread http://www.forexfactory.com/showpost...7&postcount=60
The legend of the Gambler
p.s. seems like it is saturday, gentlemen

ah man. this looks good. i already see trades to avoid even though the rules match up.

thanks

I'm glad if it would help you Sed.

let me know how it works out.

here is a sophisticated volatility calculator i created over a year ago.

http://www.forexfactory.com/showthread.php?t=62342

everyone but cobraforex is welcome to go check it out.

)))))))))))

Sed34,

Unless you are the broker, the market price has to move in order to profit from it. Understanding why and when prices are volatile and when to expect volatility (not just the usual news announcement) will provide a better environment from which to trade or not, specially when price is acting abnormally (this can also be seen as low volatility when it should be active).

Definition of volatility may not be best answered by average bar size alone. But better the total distance traveled inside a specific time period. Price can move very fast back and forth inside a specific small range preceding a breakout or attempting to break support/resistance showing up as a small bar or doji , or drift slowly in one direction painting a nice candle, how would you view each historically if you were not there to witness each respective candle as it formed.

A true market volume, (order size ) is needed to correctly visualize a candle’s volatility. Unless your trading futures, there is no actual market volume, only tic volume for spot = # of price changes inside the period.

If you are looking historically, throwing a Tic volume on the ATR indicator might assist you as both should spike when things are moving.

But as a help, learn to embrace the volatility, looking for it.. The market moves in a series from accumulation to distribution , consolidation/range to impulse and back again. Each has it’s own personality and ways to profit.

Regards,

An additional point (not sure if it was made already) is the term average true range means it accounts for gaps, although they are a rarity in forex.

But for noobs true range would be

a) the difference of todays high to low or
b) the difference from the previous close to todays low if there was a gap down opening or
c)the difference from the previous close to todays high if there was a gap up opening.

ATR would then be average of True Range over X number of bars.

How to apply the ATR indicator, as for any indicator, or any other form of measuring volatility will be quite subjective. Whether intentionally done or not (by the big guys?) things rarely repeat themselves in an orderly way. They repeat in a sort, but more often it is hindsight that realizes the repetition, not actual "practice" as you are concerned about.

OpenOffice Spreadsheets (or Microsoft if you have it) would probably be a better bet to look for patterns. High volatility v. low volatility may give an elaborate pattern of overall price movement, but nothing that cant be seen without a lot of digging.

In terms of your first question, which is in your title, taking the daily average range over the past couple of years and comparing it to the last week will tell you where the volatility compares. As Johnedoe mentioned, we were in major volatility when everything was falling. So, although volatility may not give you a direction, it may give you warning that things will move fast and far. Whether it continues to be volatile after you get in is another discussion completely .

----- I feel like part of a circle at a playground in this thread chanting "Fight... fight... fight." Seriously, cool it folks. Being angry wont help anything.

When daily volatility is high, trends take less time to complete. If you use a trend-based system you need to adjust it to shorter TFs to compensate. Doing so, however, exposes you to intra-day whipsaws, which is why a lot of people simply avoid really high recent volatility.

For intra-day traders, however, high volatility is exactly what's needed.

For the former you can run sets of daily ATR(7). If the 100 avg is <= to the 365 avg, or some relationship there-of, trade. For the latter, inverse it.