Introduction
Quick-tip 104 shows how simple it is to build a volatility indicator and equivalent paint bar study in TradeStation EasyLanguage.
Volatility can sometimes provide useful information about the way a market is behaving and may help traders identify periods where price movement is expanding or contracting. For example, some traders monitor measures such as Average True Range (ATR), Bollinger Band width, or historical volatility to gauge whether markets are relatively quiet or experiencing larger-than-normal price swings.
In certain situations, increased volatility may create opportunities for shorter-term trading strategies, while lower volatility environments may favor different approaches. However, volatility indicators should not be viewed as predictive tools in isolation and are generally best considered alongside other forms of technical or market analysis.
Markets can behave unpredictably, particularly during news events or periods of unusual market activity, and no indicator or methodology can guarantee profitable results. Any examples or concepts discussed are for educational purposes only and are intended to illustrate how volatility measurements might be incorporated into a broader analytical framework rather than to provide trading or investment advice.
Markets do not move in a constant way. At times they are calm and compressed, at other times they expand aggressively and become highly directional.
In this tutorial, we build a simple volatility regime Detector in EasyLanguage that classifies market conditions into:
- Low volatility
- Normal volatility
- High volatility
The indicator compares:
1. Current volatility
Measured using ATR (Average True Range)
2. Normal market volatility
Measured using a moving average of ATR
3. Relative volatility ratio
Volatility Ratio = ATR / Average ATR
User inputs
The user inputs (and default values) are:
ATR_Length( 14 ),
ATR_Baseline_Length( 50 ),
Low_Threshold( 0.85 ),
High_Threshold( 1.15 ),
UseSmoothing( true ),
SmoothingLength( 3 );
In the above image the lines of the indicator can be seen clearly.
Plot3 (displayed in yellow) displays the Low_Threshold, a user input initially set as o.85
Plot4 (displayed as cyan) displays the High_Threshold, a user input initially set as 1.15
Plot2 (displayed as white) displays the volume ratio (or smoothed volume ratio
Plot1 (displayed as pink) displays the ‘regime’ which is either:
- 1 (Low volatility)
- 2 (Normal volatility)
- 3 (High volatility)
Quick-tip 104 code
Download the quick-tip 104 indicator and paintbar study
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Free download for Gold Pass members
Download the quick-tip 104 TradeStation EasyLanguage ELD free for Gold Pass members. If you are a Gold Pass member you can download the tutorial code below, please make sure that you are logged in with your Gold Pass user name and password. 
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Explanation of quick-tip 104
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ANY EASYLANGUAGE OR POWERLANGUAGE TRADING STRATEGIES, SIGNALS, STUDIES, INDICATORS, SHOWME STUDIES, PAINTBAR STUDIES, PROBABILITYMAP STUDIES, ACTIVITYBAR STUDIES, FUNCTIONS (AND PARTS THEREOF) AND ASSOCIATED TECHNIQUES REFERRED TO, INCLUDED IN OR ATTACHED TO THIS TUTORIAL OR PROGRAM DESCRIPTION ARE EXAMPLES ONLY, AND HAVE BEEN INCLUDED SOLELY FOR EDUCATIONAL PURPOSES. MARKPLEX CORPORATION. DOES NOT RECOMMEND THAT YOU USE ANY SUCH TRADING STRATEGIES, SIGNALS, STUDIES, INDICATORS, SHOWME STUDIES, PAINTBAR STUDIES, PROBABILITYMAP STUDIES, ACTIVITYBAR STUDIES, FUNCTIONS (OR ANY PARTS THEREOF) OR TECHNIQUES. THE USE OF ANY SUCH TRADING STRATEGIES, SIGNALS, STUDIES, INDICATORS, SHOWME STUDIES, PAINTBAR STUDIES, PROBABILITYMAP STUDIES, ACTIVITYBAR STUDIES, FUNCTIONS AND TECHNIQUES DOES NOT GUARANTEE THAT YOU WILL MAKE PROFITS, INCREASE PROFITS, OR MINIMIZE LOSSES.
