Volatility Indicators — Reading Big Price Moves
Volatility measures how much price swings. What high vs low volatility means for your stops and targets, and how ATR and squeezes fit in.
What volatility is
Volatility is the size of price swings over a period. High volatility (BTC moving from 70k to 75k to 68k in a day) means bigger risk and bigger opportunity. Low volatility (70k drifting to 70.5k and back) means smaller risk and smaller moves.
A simple measure
One rough gauge is (high − low) ÷ close. With a high of 75k, low of 70k and close of 72k, that is about 6.9%. As a loose guide, under ~2% is quiet and over ~5% is active.
ATR
ATR (Average True Range) is a common volatility indicator — the average range over a number of candles (often 14). A high ATR means high volatility; a low ATR means calm.
How it changes your trade
- High volatility: use wider stops (the noise is larger), aim for larger targets, and keep leverage low because ranges are big.
- Low volatility: use tighter stops and smaller targets — or wait for volatility to expand on a breakout before committing.
The squeeze
When Bollinger Bands narrow, volatility is low and a period of expansion (a breakout) often follows. A squeeze is a heads-up to watch for the next move, not a signal to enter blindly.
Common mistakes
- High leverage into high volatility — a fast way to get liquidated.
- Forcing trades in dead, low-volatility markets — small ranges mean small rewards; waiting is often better.
fastbot lets you set alerts for unusual moves and place orders with the stops and targets your volatility read calls for. Set up alerts.