Volatility Ratio

Volatility Ratio reduces "was that bar unusual?" to a single dimensionless number. Its default mode implements the Volatility Ratio as Jack Schwager framed it — the current bar's true range over a trailing baseline, flagging wide-range bars with diamonds above a threshold — while a second mode divides short-lookback by long-lookback volatility, read around a dashed 1 line.

How to Trade the Volatility Ratio?

• Wide-range event bar: a reading above the Event Threshold marks a bar that swallowed an unusually large share of recent movement — often news, breakouts, or capitulation. The ratio measures size only — the dashboard's close-in-range figure adds the directional hint.
• Expansion above 1: in Short vs Long mode the market runs hotter than its own norm; the 1-line crossings are alerted both ways.
• Contraction below 1: conditions cooling — where squeeze setups form.

Volatility Ratio Settings

• Ratio Mode (default Wide-Range Bar (Schwager)): the event-bar construction, or Short vs Long Volatility.
• Baseline Length (default 14): trailing window the bar is measured against, taken on the prior bar so a bar never inflates its own reference.
• Baseline Type (default Average True Range): the window's ATR, or the gap-adjusted Window Span, which runs smaller and needs lower cutoffs.
• Event Threshold (default 2): the wide-range cut — about twice the typical recent bar with the ATR baseline; a convention, not a law.
• Mark Event Bars (default enabled): diamonds at the top of the pane.
• Short Length (default 5) and Long Length (default 20): the fast and slow windows of the short-over-long form.
• Volatility Basis (default ATR): ATR or Standard Deviation on both sides, with Stdev Source (default close) feeding the latter.
• Show Dashboard (default enabled) and Gradient Fill (default enabled): the readout panel and fill from zero.

Frequently Asked Questions

Why a ratio instead of just reading ATR?

Average True Range is expressed in price units, so its level does not carry over between symbols or eras. Dividing one range measure by another cancels the units — a reading of 2 reads identically on any chart.

Do event bars predict direction?

No — the construction works purely on range sizes, so it carries no directional read. A bar closing on its high says something different from one closing mid-range; read the close and surrounding structure for the lean.

Which mode should I run?

Wide-Range Bar isolates single-bar events and suits news and breakout study. Short vs Long tracks where volatility sits relative to its own norm — regime work, sizing, and timing compression setups.