This is a 'monitoring' indicator to see if an instrument is viable enough to be traded, by virtue of volatility (or lack of volatility in context may lead to a break out), or may become so. It shows the following information:
Price Range (high - low) averaged across a set of bars: Useful gauging potential trading profits. This was its initial goal, to not measure bars manually!
ATR: As a comparison point for the price range above. Divergence between true range (TR) and plain price range might signal volatility changes occurring in the instrument.
Signal volatility line: a moving average of the larger of the average price range and ATR. This takes inspiration from other indicators like MACD and Stochastic, and is a way of comparing change in recent volatility --- this achieves the momentum part. The larger was chosen to keep things simple, and not have a signal line per range!
Do you mean generally, or is there a separate indicator called Volatility-Based Momentum?
If generally, I suppose it is. But, honestly, I am struggling with making use of the signal line, average of an average is hard to reason about.
I think, potentially, a better idea is to simply consider fast and slow volatility moving averages, much like you would do for plain price, but apply to a volatility measure (either price range, or TR). This will provide historical context of short term vs. longer term volatility.
Thanks for sharing that, very cool -- the key advantage of VBM is consistent/equal comparison across multiple instruments.
Mine is not the same as that, there's no normalisation, so you can't compare across instruments (was never a goal), but it's more assessing or comparing volatility in one period vs. volatility in another period.