This is a very simple script which can be used as measure to define your trading zones based on volatility.
Concept This script tries to identify the area of low and high volatility based on comparison between Bandwidth of higher length and ATR of lower length.
Relative Bandwidth = Bandwidth / ATR
Bandwidth can be based on either Bollinger Band, Keltner Channel or Donchian Channel. Length of the bandwidth need to be ideally higher. ATR is calculated using built in ATR method and ATR length need to be ideally lower than that used for calculating Bandwidth.
Once we got Relative Bandwidth, the next step is to apply Bollinger Band on this to measure how relatively high/low this value is.
Overall - If relative bandwidth is higher, then volatility is comparatively low. If relative bandwidth is lower, then volatility is comparatively high.
Usage This can be used with your own strategy to filter out your non-trading zones based on volatility. Script plots a variable called "Signal" - which is not shown on chart pane. But, it is available in the data window. This can be used in another script as external input and apply logic.
Please can you guide me, how we can use this indicator on intraday basis.
PineCoders
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This publication is now featured in our Editors' Picks: tradingview.com/scripts/editors-picks/ . In the name of all TradingViewers, thank you for your valuable contribution to the community, and congrats!
Trendoscope
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@PineCoders, thanks very much for your constant support.
fj891819
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nice work, must try it sometimes
serkany88
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You are a damn wizard with your ideas, hats off sir.