When there is a gap in the implied volatility as pointed out in the chart posted; does that mean that there is going to be a down ward trend or is it just a change in the current trend of the Diagnostic Price Alert chart?
Choppy Market Warning Chart - Timfave’s library
Thanks Tim H
As I understand it, the choppy market warning indicator should be used only during US RTH (at least on US markets). And, as I understand it, when there’s “divergence” in the two lines (different colors), it means there’s no trend or direction.
That would not be a gap - a gap is a lack of price quotation
This is a divergence.
If the colors change red and green that is a chop warning
If they are different AND the are going in different directions (divergence) that is even a stronger choppy warning.
I prefer to use Blue and Yellow like I show on the style screen in the trading room better than use green and red so your not thinking up and down - as the direction is not the focus - the focus is implied volatility not lining up with market trend.
This is not a “trend indicator” it is a choppy market warning indicator
Thank you very much for all of your helpful insights. Tim
