Volatility Indicator Detects and Protects
The volatility indicator detects market movement early. It measures price swings in real time. High readings signal increased activity. Low readings show calm periods. This helps traders prepare for changes.
A great example of the Quantum volatility indicator in action yesterday in the eur/aud currency pair. The indicator was triggered on unexpected comments from ECB member Nowotny – noted hawk – who suggested the ECB’s current program of QE was likely to come to an end sooner rather than later. Ahead of these comments eur/aud was looking to continue its bearish tone.
However, on the comments hitting the newswires sentiment in the euro changed and euro pairs soared as volatility hit the market. This indicator triggers in real time so, as traders, we know instantly something is afoot.
What then generally happens is that on completion of the volatility candle, price action retraces to within the spread of the candle as the sting is taken out of the move. But the subsequent candle is also interesting as it is hanging man on high volume, which is almost always a precursor to a reversal in trend and sentiment. And this is exactly what happened as the ECB took the unusual step of rebutting Nowotny’s remarks.
Detection in Action
Detection works by tracking average true range or similar metrics. Spikes warn of potential breakouts or reversals. Volume price analysis (VPA) confirms these signals. High volatility with volume shows conviction. Quantum’s volatility indicator on NinjaTrader or MT5 includes alerts for quick response.
Protection for Traders
Protection comes from risk management. The indicator highlights overextended markets. It prevents entering during extreme chop. Use it to adjust stops or reduce position size. Anna Coulling’s VPA approach with Quantum tools turns volatility into an ally, not a threat.
Detect and protect with this essential indicator. Quantum makes volatility trading safer and more profitable.
A great example of the Quantum volatility indicator in action yesterday in the eur/aud currency pair. The indicator was triggered on unexpected comments from ECB member Nowotny – noted hawk – who suggested the ECB’s current program of QE was likely to come to an end sooner rather than later. Ahead of these comments eur/aud was looking to continue its bearish tone.
However, on the comments hitting the newswires sentiment in the euro changed and euro pairs soared as volatility hit the market. This indicator triggers in real time so, as traders, we know instantly something is afoot.
What then generally happens is that on completion of the volatility candle, price action retraces to within the spread of the candle as the sting is taken out of the move. But the subsequent candle is also interesting as it is hanging man on high volume, which is almost always a precursor to a reversal in trend and sentiment. And this is exactly what happened as the ECB took the unusual step of rebutting Nowotny’s remarks.
How Market Makers Use Volatility to Trap Traders on FOMO
Volatility creates excitement in markets. Sharp moves trigger FOMO—Fear of Missing Out. Retail traders chase spikes. This often leads to traps. Market makers (professionals) use volatility to their advantage. They trap impatient buyers or sellers.
Why Volatility Fuels FOMO Traps
Volatility spikes price fast. News or events drive it. Traders fear missing the move. They buy highs or sell lows. But professionals fade these. They sell into buying frenzies or buy into panic selling. Volume price analysis (VPA) reveals this—low volume on spikes shows no conviction.
Classic FOMO Trap Setup
Price surges on news. Candles widen. Volume low. Retail chases—FOMO in action. Price stalls. Reversal follows on high volume. Professionals distributed at highs. Quantum Trend Monitor on NinjaTrader warns of fading momentum.
VPA Spots the Trap
VPA is key to avoiding FOMO traps. High price on low volume = weakness. Wait for volume confirmation. High volume reversal signals entry against the crowd. Quantum Accumulation/Distribution indicator highlights distribution early.
Practical Tips to Avoid Traps
Stay patient. Let volatility settle. Enter on volume-confirmed moves. Avoid chasing low-volume spikes. Anna Coulling’s VPA approach with Quantum tools turns traps into opportunities. Spot professional intent—trade with them, not against.
Market makers use volatility to trap on FOMO. VPA reveals their game. Quantum indicators make spotting traps reliable. Trade disciplined—let volume guide you.
By Anna Coulling
Creator of Volume Price Analysis