For Stock, Futures and Forex traders this may not be a replacement for MACD . But for an Option Trader, this would make sense 1000 times.
So, What is this?
This is the MACD for OPTIONS traders, remove the smoothness and adjust for volatility . Thats all it is.
Why is it important?
No one, ABSOLUTELY no one should be buying options in high volatility period for a long haul. So, this indicator takes that out of your guess work and only spits out price movement with relation to volatility .
You can use this exactly like a MACD for any options ( aka , volatility driven market).
Few things I have added, since I created and used it privately.
1. Chop Zone - Trade the Extremes of any Product 2. Buyers Zone - Shorts reconsider 3. Sellers Zone - Longs reconsider
Why did I create this?
Volatility dictates the market movement. That is an indepth conversation. If you are curious you can research on how shorts are squeezed, what are market makers obligations, how they maintain profitability. How NITE got burned, are some starting point for your own research.
So, if you are an options trader, I highly recommend to use this/test it and share your thoughts and how you use it.
@ucsgears ! is there a specific reason that the MACD line is not Smoothed?
UDAY_C_Santhakumar
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@Juggy..., Its because the relative Volatility component is added into the indicator. As the Volatility Changes, the indicator adds that component to it. If the volatility component is taken out, its nothing but a MACD
Juggy...
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thanks @ucsgears ! I was looking for smoothing after adding 'volatility component' data.
Also, curious of, what data point does the histogram imply ?
Juggy...
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@ucsgears ! am presuming the histogram the 'volatility component' data ? is that understanding correct? thanks!
UDAY_C_Santhakumar
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@Juggy..., historgram is the difference between PANV and signal line (Smooth PANV)
Juggy...
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@ucsgears .. signal line is that one ... was overlooking too much :-)
one of a very much valuable indicator script 👌 👌 👌 👌 🤝🙏
ashdays
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Thank you for bringing this to the community. Much appreciated!