Education / Indicators / Chaikin's Volatility

The Volatility Chaikin's indicator measures the difference between high and low prices. This formula is used to indicate the top or bottom of the market.

Chaikin's Volatility indicator measures the volatility of a security. High values indicate that prices are changing a large amount during the day. Low values indicate that prices are staying relatively constant. Note that both trending and level prices can have high or low volatility.

High volatility levels can sometimes be used to time trend reversals, such as market tops and bottoms. Low volatility levels can sometimes be used to time the beginning of new upward price trends following periods of consolidation.

Calculation

Chaikin's Volatility is calculated by first calculating an exponential moving average of the difference between the daily high and low prices. Chaikin recommends a 10-day moving average.



Next, calculate the percent that this moving average has changed over a specified time period. Chaikin again recommends 10 days.