You can use this indicator against any asset or within any market. It actually reaps excellent results against the DJI and XAUUSD One of my suggested uses for it is if you're scalping, only enter a position when there is (when there's no background color present). If you're swinging, only enter a position when there's low (when the red background color is present).
Another way to use it (although this isn't intended, just incidental) is to take a position in the direction of the first bar after the red background has gone/after low has passed. So if we get a declining candle when we exit a low zone, short. Otherwise long. This is the experimental side of it though.
However, this indicator won't tell you what direction to trade in, so in order to get use from it I suggest having a trend filter and a trigger. Luckily these two things are in most traders' arsenal. If not, take a look at my other script which is a timelessly brilliant trigger for buying and selling:
Something else to consider is that the is relative. If we go through a period of incredibly high then afterwards we can sometimes expect the filter to plot a red background even though there is still acceptable left in the market. The at that point is much less than the beforehand.
With all that said, this easy-to-read tool will help you avoid flat periods when scalping and, conversely, help you determine good times to enter a swing trade. For those who had difficulty trading the markets as of late due to , this indicator is perfect for you
Access to the filter is provided for 10$, payable in most low-transaction-fee cryptocurrencies. Access is limited to 250 customers. For more information message me through TradingView or message @overttherainbow through Telegram.
Have a nice day and good luck trading.
Here’s the legend for the background colors:
Red: high volatility
Golden brown: entering high volatility/moving away from high volatility
Dun yellow: entering low volatility/moving away from low volatility
Green: low volatility
Golden-brown: entering high volatility/moving away from low volatility
Dun-yellow: entering low volatility/moving away from high volatility
Also forgot to mention that you can tune the parameters of the script to work how responsive it is to market conditions. The setting I have on the chart are pretty responsive, with a 1 and 5 MA and the Bollinger Bands at a length of 10. In the following picture the timeframe is set to 2HRs, the MA is set to 1 and 26, and the Bollinger Bands are set to 20: