Volatility indicators, explained for Indian traders
Volatility indicators measure how much a market moves, not which way. They size the risk of every trade — governing stop distance, position size and whether a market is calm enough to fade or wild enough to break out.
What are volatility indicators? Volatility indicators measure the magnitude of price fluctuation rather than direction. ATR, Bollinger Bands, Keltner Channel, Donchian Channel and Standard Deviation are the core tools — used to set stops, size positions and spot volatility expansion and contraction.
Average True Range ATR
VolatilityThe Average True Range measures market volatility by averaging the true range — the greatest of the high-low span or the gaps from the prior close — …
Bollinger Bands BB
VolatilityBollinger Bands plot a moving average with an upper and lower band set two standard deviations away, so the bands widen when volatility rises and squ…
Keltner Channel
VolatilityThe Keltner Channel plots an exponential moving average with upper and lower bands set a multiple of Average True Range away, forming a smooth volati…
Donchian Channel
VolatilityThe Donchian Channel plots the highest high and lowest low over a look-back period as upper and lower bands, with their midpoint between them, so a p…
Standard Deviation SD
VolatilityStandard Deviation measures how far price disperses from its own moving average over a look-back period, quantifying volatility as a single number th…
Historical Volatility HV
VolatilityHistorical Volatility measures how much a market's returns have fluctuated over a past period, expressed as an annualised percentage, giving a standa…
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Frequently asked questions
What are volatility indicators?
Volatility indicators measure the magnitude of price fluctuation rather than direction. ATR, Bollinger Bands, Keltner Channel, Donchian Channel and Standard Deviation are the core tools — used to set stops, size positions and spot volatility expansion and contraction.
Which volatility indicator is best for Nifty?
There is no single best volatility indicator — each has strengths in different conditions. Most Indian traders start with the most popular in this family and combine it with an indicator from another category for confirmation. Explore each below with its formula, settings and Nifty example.