Technical indicators / Range Rider Indicator

Formula

Trading use

Technical Indicator Range Rider is the measure of market volatility. However, the calculation is based not on the gauge of the price movements strength, but on the quotient, which is the result of division of one volatility level (2-day ATR) by the other one (7-day ATR). The result is Range Rider Indicator's values that point out either strengthening or weakening of volatility; it takes into account the influence of the longest-term period on the least short-term one.

Using the Range Rider Indicator, the important trading periods are those of decline in the values of the indicator. They point out the weakening of volatility and, consequently, the fact that after the force of price movements decreases they will gain momentum again, and simultaneously the Range Rider Indicator will grow. Thus, the ideal areas for the market entry are the ones where the Range Rider Indicator values are low; in case volatility decreases, either a price reversal occurs or the price correction completes, and then the price movement will resume in the same direction. This feature can be successfully applied in trading, selling or buying an asset while the Range Rider is at its lows.

According to Larry Williams, the indicator’s founder, it is important to pay attention to the trading days when closing prices are very close or equal to the day’s high (or the day’s low in case of a downward trend). In these circumstances data provided by the Range Rider Indicator should be carefully watched; if the indicator's values are high (amid the price’s growth or drop) and the trading session closes at the level of the high or low, a price reversal may well occur during the next session or within several trading days to come.