OPEN-SOURCE SCRIPT
Updated Risk Context + Position Sizing
What This Indicator Does (And Doesn't Do)
This is NOT a buy/sell signal indicator. Instead, it's a risk management tool that helps you understand two critical things:
The Core Problem It Solves
Imagine you always risk the same amount on every trade - say $100. But sometimes the market is calm and predictable, other times it's wild and unpredictable. This indicator says: "Hey, the market is going crazy right now - maybe only risk $70 instead of your usual $100."
How It Works
Measures Market "Nervousness"
Categorizes Risk Environment
Important Disclaimers
This is NOT a buy/sell signal indicator. Instead, it's a risk management tool that helps you understand two critical things:
- How volatile the market is right now (compared to recent history)
- How much you should risk on your next trade based on that volatility
The Core Problem It Solves
Imagine you always risk the same amount on every trade - say $100. But sometimes the market is calm and predictable, other times it's wild and unpredictable. This indicator says: "Hey, the market is going crazy right now - maybe only risk $70 instead of your usual $100."
How It Works
Measures Market "Nervousness"
- Uses ATR (Average True Range) to measure how much prices typically move each day
- Compares today's volatility to the past 100 days
- Shows you a percentile (0-100%) - higher = more volatile
Categorizes Risk Environment
- LOW (green): Market is calm, you can size up slightly
- NORMAL: Standard conditions, use your normal position size
- HIGH (red): Market is jumpy, reduce your position size
- EXTREME (dark red): Market is in chaos, significantly reduce size
Important Disclaimers
- This doesn't predict price direction - it only measures current market stress
- You still need a trading strategy - this just helps you size it properly
- Past volatility doesn't guarantee future volatility
- Always combine with proper stop losses and risk management
Release Notes
Improved position sizing logic by replacing step-based scaling with a smoother volatility-adjusted model. This enhances risk calibration and responsiveness to market conditions.Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.