Alpha Trading - Alpha Volatility Quality - Coder Wolves

Here at Alpha Trading if we find something that works, that aligns with our philosophy then after thorough testing by the Alpha Wolves, we add some of our own secret sauce and then provide it back to the community as a free indicator.

The Alpha Volatility Quality is one such indicator and is largely influenced by the original work of Thomas Stridsman, and more recently people such as Lazy Bear.

The original Volatility Quality Index (VQI ), by Thomas Stridsman, can help you identify better trade opportunities by distinguishing between good and bad volatility. Formula for the system discussed in Advanced Strategies (p. 56) / August 2002 Active Trader Magazine.

Thomas, or Mr Stridesman to some, suggested to buy when VQI has increased in the previous 10 bars (use the SMAs ) and sell when it has decreased in the previous 10 bars.

As the indicator is mostly directional, we have found that it's best used in conjunction with other indicators from the Alpha Trading Free Chart.

When you first load up the Alpha Volatility Quality, you will see a green and red line and a white line.

Green and Red Line = Alpha Volatility Quality

White Line = AVQ Slow MA

Alpha Trading – Alpha Volatility Quality

At Alpha Trading, we wanted to add some additional advanced options, so we also allow for additional smoothing to be applied, to make the indicator more tradable. If that wasn’t enough, we also added deviation bands.

Default Out of the Box Settings

When you first load up the indicator, you will see a green / red line and a white line

Green and Red Line = Alpha Volatility Quality

White Line = AVQ Slow MA

There is also a Fast MA input you can toggle on.

If you prefer you can display the Alpha Volatility Quality in Columns instead of a line.

Basic Trade Signal

Long – Consider a long when the AVQ Line goes above the Moving Average (i.e. The AVQ Green Line goes above the white MA)

Short – Consider a short when the AVQ line goes below the Moving Average(i.e. The AVQ Red Line goes below the white MA)

The Chart below is showing trades based on Good and Bad volatility. We have also added VQI-LB to show the Dominance and more versatile AT-AVQ.