ATR Volatility Percentage

The ATR Volatility Percentage indicator measures market volatility by calculating the Average True Range as a percentage rank relative to a historical lookback period. This tool helps traders quantify current volatility levels to determine if a market is experiencing historically high or low price fluctuations.

Usage

The Usage section focuses on identifying volatility regimes to suit specific trading styles. A high percentage rank (e.g., over 75%) suggests that the asset is experiencing significant volatility compared to its recent history, which may be ideal for breakout or grid trading strategies. Conversely, a low percentage rank indicates a period of consolidation or low activity.

The tool is effective across various timeframes, though it is particularly insightful on the 1h, 4h, and 1D charts for identifying sustained volatility trends. Traders should remember that ATR-based metrics do not indicate the direction of the price, only the magnitude of price movement.

Details

The script functions by first calculating the True Range smoothed by a Hull Moving Average (HMA) over the user-defined ATR Length. This value is then passed through a percentage rank function (ta.percentrank) based on a specified lookback period.

The output is displayed as a histogram where the colors change based on the volatility percentile:

• Green: High Volatility (Rank >= 75)
• Yellow: Elevated Volatility (Rank 50 - 74)
• Blue: Moderate Volatility (Rank 26 - 49)
• Red: Low Volatility (Rank <= 25)

Settings

• ATR Length: Sets the period for the initial Average True Range calculation using a Hull Moving Average.
• Period Look Back Length: Defines the historical window used to calculate the percentage rank of the current ATR value.

FAQ

How do I interpret the colors?

The colors represent the percentile of current volatility. Red indicates the bottom 25% of historical volatility, while green indicates the top 25%, signaling highly active market conditions.

Can this predict price direction?

No, the ATR Volatility Percentage only measures the intensity of price movement. It can reach high levels during both aggressive uptrends and sharp downtrends.

How can I access the ATR Volatility Percentage?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.