What it is
Chaikin Volatility was created by Marc Chaikin. It looks only at the high to low range of each candle, smooths it, and asks how much that smoothed range has changed compared with a set number of candles ago.
It sits in its own pane and swings above and below zero. Above zero means candles are bigger than they were; below zero means they have shrunk.
How it is calculated
1. For each candle, take the high minus the low. 2. Smooth those ranges with a 10 period exponential moving average (an average that weights recent candles more). 3. Compare today's smoothed range with the smoothed range 10 candles ago. 4. Express the change as a percentage: (now minus then) divided by then, times 100.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| length | 10 | 2 to 200 | Both the smoothing and the look back distance. Longer gives a slower reading of volatility changes. |
How to read it
How to trade it
- 1
Look for a stretch where Chaikin Volatility has fallen well below zero: the market is compressed.
- 2
Entry trigger: it turns up and crosses above zero while price closes outside the quiet range. On US30 15 minute, take the side of the breakout close.
- 3
Stop: inside the old range, for example 30 to 40 points on US30 15 minute.
- 4
Target: 2 times the stop, or exit when Chaikin Volatility peaks and turns down sharply.
- 5
Do not use it alone for direction; check the breakout with a trend tool.
The breakout idea is cancelled if price closes back inside the quiet range and Chaikin Volatility drops back below zero.
WickSpeak draws it on the chart and writes a plain-English reading on the live candle: what it is, what it is doing now, how to trade it and what would prove it wrong. Playbook can test it as a condition in a play: is above or below a number, crosses above or below a number, is above or below its own average, is rising and is falling.
Best markets and timeframes
Works on any market with clear quiet and busy phases. On gold and US30 the 15 minute to 4 hour charts show the session rhythm well.
Common mistakes
- Treating a rise as bullish; it only means candles are bigger, in either direction.
- Confusing it with Chaikin Money Flow or the Chaikin Oscillator, which measure volume and buying pressure.
- Entering on the first spike after news, when spreads and slippage are widest.
Works well with
Questions traders ask
What does Chaikin Volatility measure?
It measures the rate of change of the average high to low range of candles. Rising means candles are getting bigger, falling means they are getting smaller.
What is the default setting for Chaikin Volatility?
The common default is 10 for both the smoothing average and the look back. Some traders use 10 and 10 or vary them separately.
Is Chaikin Volatility the same as ATR?
No. ATR gives the average candle size in points; Chaikin Volatility gives the percentage change in candle size. ATR is better for setting stops, Chaikin Volatility for spotting expansion.
Does Chaikin Volatility show direction?
No. It only shows whether volatility is expanding or contracting. Use price action or a trend indicator to choose the side.