The Kaufman Volatility Indicator for MetaTrader 5 is one of the Kaufman trading indicators that was developed to track the ever-changing market volatility of any instrument. This Forex trading indicator has been included in the algorithms that determine momentum in the Forex market.
The indicator was created to determine market volatility with greater accuracy than other volatility indicators. Therefore, it can positively improve your results as price volatility determines the true direction of the market. In other words, the level of volatility in the market can affect any trading strategy.
Thus, the indicator will contribute to more accurate trading forecasts. For example, you can expect a breakout of a support/resistance zone if the price approaches it with strong volatility.
How to Trade with the Kaufman Volatility Indicator for MT5
The image below shows the market volatility of the EURUSD pair using the Kaufman Volatility indicator for MT5.
The tomato red line of the indicator is used to measure and reflect changes in market volatility. Thus, an increase in bullish/bearish volatility is shown when the indicator line constantly moves up. Conversely, the indicator suggests a decrease in the asset’s volatility when the line moves down.
Thus, you can use the indicator’s volatility signals to determine the ideal zones to enter or exit a trade.
Setting
The indicator comes with the following customizable settings:
Efficency Ratio period: This shows the period for trend analysis.
Histogram switch: This turns on/off the histogram bars.
Horizontal Shift: This parameter determines the position of the indicator on the chart.
Conclusion
The Kaufman Volatility Indicator for MT5 is essentially a market momentum indicator. In addition, this is a handy trading indicator that will help both beginners and experienced forex traders to effectively track the volatility of any asset.
