Notis %V
Type
Trend follower
Short introduction
The Notis %V indicator developed by Steve Notis measures two volatilities; one for the uptrend and one for the downtrend, in order to find trend reversals by crossing these two lines.
Statement
Upward volatility is calculated by calculating the difference between the daily high and the daily close. The difference is therefore always greater than or equal to zero.
Downward volatility is calculated by calculating the difference between the daily close and the daily low. This difference is also always greater than or equal to zero.
Both curves are then usually smoothed again with a GD.
Formula/calculation
+%V =Ht -Ct
and
-%V =Ct -Lt
where:
+%V = curve of "upward volatility"
-%V = curve of "downward volatility"
Interpretation
According to the Notis formula, upward volatility increases in downtrends, as prices close near the low and the spread between close and high tends to increase. The exact opposite applies in upward trends. When the two lines intersect, a trend change takes place.
A positive signal is therefore given when the upward volatility intersects the downward volatility from top to bottom, a negative signal when the upward volatility intersects the downward volatility from bottom to top.
Default setting
- daily, the GD is calculated over 14 days as standard
Basic trading systems
- Notis %V
In the basic trading system "Notis %V", the upward volatility is shown as a red curve ("+V"). Similarly, the blue curve corresponds to the downward volatility ("-V"). The default setting for the method is linear, for the period 14. The base trading system provides buy signals when the upward volatility is less than the downward volatility and sell signals when the upward volatility is greater than the downward volatility.
