Lux Volatility

Settings - Interpretation - Display Modes

The Lux Volatility is a volatility indicator that aims to measure the current market volatility while being in a fixed [0,1] range, thus making it easier to interpret. The Lux Volatility comes complementary with your subscription to Lux Algo Premium.‚Äč

The Lux Volatility gives a lot of control to the user over the visual aspect of the indicator, as such it is possible to select between 4 different display modes and use 3 different color modes.

Main Settings

Resolution
Length
Filter
Display Mode
Color Mode
Heatmap Resolution
Resolution

The Lux Volatility can be used for multi-time frame analysis by using the resolution setting, who determine which price time-frame to use as input for the indicator.

Length

Determines the number of past prices values to be used as input. Higher values allows you to measure the amplitude of longer price variations.

Filter

Higher values of filter attenuate lower values of the indicator, only conserving higher values associated with more volatility.

above filter = 2, below filter = 8
Display Mode

Determine how the indicator should be displayed on your charts, the user can choose between the following modes:

  • Heatmap

  • Line

  • Gradient

  • Multi Length Analysis

More information on each display mode below.

Color Mode

Determine the colors to be used by the indicator, note that the color mode does not affect the "Line" display mode. The user can choose between 3 different color modes.

Heatmap Resolution

The heatmap resolution allows you to control the visual resolution of the indicator, with higher values allowing you to stretch out the indicator panel but might create some visual artefacts.

Interpretation

A higher value of the Lux Volatility indicator will be associated with a more volatile market, but it is easier to interpret the indicator according to the zone where it is currently located.

A low volatility is associated with the indicator being below 0.25 (the blue level when using "Line" display mode), here the market is not making significant moves.

Contrary, high volatility is associated with the indicator being above 0.75 (the red level when using "Line" display mode).

It is possible to find out when volatility is increasing or decreasing by analysing when the indicator goes above the 0.25 and under the 0.75 level, as such when the indicator cross over the 0.25 level we can expect the market to become more volatile, the user should be cautious, and when the indicator cross under 0.75, we can expect volatility to decrease.

Display Modes

The Lux Volatility can be displayed differently depending on your preferences, by default the indicator is displayed as a heat-map creating a line with a lighter color indicating the value of the indicator over time.

Heatmap mode

You can switch to line mode to have a simpler look over the indicator, this mode will also display two constant levels equal to 0.25 for the lower level and 0,75 for the higher one.

Finally, the gradient display mode will fill the zone between 0 and the value of the indicator with a color determined by the color mode.

Multi Length Analysis Mode

Unlike the previous modes, the "multi length analysis" feature allows the user to have information regarding the indicator using different Length settings ranging from 10 to 100, with colors located at the bottom of the scale representing lower Length values of the indicator.

Lighter colors will mean that the value of the indicator with a specific Length value is close to 1, while darker values will mean the indicator is closer to 0.