Trying to figure out what markets are doing can be a nightmare for new traders. Volatility and sudden unexpected moves can even pose a challenge to even the most experienced, veteran traders.
One key is to always trade with a comprehensive plan. Part of trading is understanding how markets typically behave during distinct market phases.
Markets may behave in a cyclic manner:
- Breakout
- Trend
- Reversal
Capturing Large Movements In Price During the Breakout Phase
In this report, we will focus on the Breakout Phase.
Breakout or Breakdown Phases may occur after sustained periods of congestion.
As price moves in a tight, sideways channel over a period of time, volatility gets compressed, much like a garden hose getting crimped. Once volatility is released, much like an un-crimped garden hose, price can shoot up or down for potentially large moves.
One key to capturing breakouts is to have high-quality tools to help you identify when a breakout might occur with signals to help you try to stay on the right side of the price move with clear entry and exit signals..
At TradingIndicators.com, we have developed a suite of tools to help you identify possible trading opportunities within each market cycle.
Volatility Crusher is the tool that we have developed to identify breakout and breakout opportunities.
Volatility Crusher has two major components, Volatility Crusher Signals and Volatility Crusher Tunnels.
Volatility Crusher Signals provides the entry signals you need for Breakouts or Breakdowns, when the arrow appears, a signal has been generated, according to their trading rules.
Volatility Crusher Tunnel gives you the tools for visualizing the more involved process of compression and expansion as price moves through the breakout phase.
To make things better, our indicators are armed with Instant Efficiency Technology (IET), which allows you to fine-tune the parameters of the indicator for any market and in any time frame to optimize performance.
IET allows you to adjust the indicators parameters for peak performance in any market. It’s like having real-time, on-chart backtesting in place.
While Volatility Crusher will work in any market and on any time frame, it typically performs the best on markets that have high volatility and price ranges.
Let’s take a look at ACM Research, Inc. (ACMR), a particularly volatile stock.
The default settings show Long and Short efficiency around 65%, but when we tweak parameters then the indicator will be adjusted to generate signals only when optimal conditions are met.
To see a full demonstration of how parameters can be adjusted, just click on the short, 6-minute video below. Once you have finished watching the video, you should then have a complete understanding of how Volatility Crusher can be used to help you identify and capture Breakouts and Breakdowns when they happen.
WATCH THE VIDEO – VOLATILITY CRUSHER (HIGHLY RECOMMENDED)
How Are Signals Generated?
There are four key criteria that must be met in order for a signal to be generated:
- First, Expansion must be crossing the Upper Band.
- Second, there must be a technical Breakout or Breakdown relative to the Lookback period, meaning that the explosive bar is pushing to new highs or lows.
- The third is Trend Direction, which is determined by the Fast and Slow Trend Periods.
When the Fast Moving Average is above the Slow Moving Average, then an uptrend is in play and we allow long signals, while filtering slow signals.
Conversely, when the Fast Moving Average is below the Slow Moving Average, then the market is in a downtrend, and the process is reversed. - Finally, quality signals are only generated when Required Volume is met. If the Require Volume parameter is enabled, then entry signals with low volume are automatically filtered.
Available on Many Popular Trading Platforms
Volatility Crusher is available for a wide variety of trading platforms including:
- Tradingview
- Ninja Trader
- Motivewave
- Metatrader
- Tradestation, and more…
Putting it All Together
Volatility Crusher gives you all of the tools to identify the Breakout Phase of any volatile market and positions you to capture Breakouts and Breakdowns when they occur.
