A volatility index that measures price distance from a moving average, helping traders identify stretched market conditions and potential mean reversion or trend-following opportunities.
Explore complementary indicator rolesHow it works
The L&S Volatility Index calculates price volatility by first measuring the percentage distance between price and a moving average. It then compares this distance to the historical volatility of the market.
The indicator generates a score that represents how stretched the price is from its average. When the score is above 30, it suggests the price is unusually far from its average, with values closer to 100 indicating extreme price stretching.
Why it may be useful
This volatility indicator provides traders with a unique perspective on market conditions by quantifying price deviation from average levels. It helps identify potential market extremes and unusual price movements that might signal upcoming reversals or significant market events.
By offering insights into price stretching, the L&S Volatility Index allows traders to make more informed decisions about market entry and exit points, potentially reducing risk and improving trading strategy precision.
When to explore it
The L&S Volatility Index works best in markets experiencing significant price movements or potential mean reversion scenarios. Traders can use it to identify overbought or oversold conditions, helping them anticipate potential trend changes or consolidation periods.
It is particularly effective when combined with other technical analysis tools, providing additional context for trading decisions across different market conditions and timeframes.
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What we’ve verified
Access, alerts and repainting behaviour have not been independently verified for this indicator. Check the creator’s current publication and settings.
General descriptions and classifications are recovered research. Verified details above identify the specific checks we have completed. Check the creator’s current publication for later changes.
