Description

• This indicator was introduced by Welles Wilder as the name suggests
• It is a volatility index made up of the ongoing calculated average, true range
• This indicates that days with less difference between high and low ranges but still showing a clear difference to the previous day are not considered for calculation

Interpretation

• An uptrend indicates an increase in volatility of the stock
• A downtrend indicates a reduction in volatility of the stock

Default Parameters Used/Inputs

• High Line
• Low Line
• Close Line
• Avg Period

Returns/Output

Wilder’s volatility of the stock

Formula

WldrVol(X,R)=(WldrVol(X-1,R)*(Bars-1)+TR[X])/Bars;
where TR[X]=Max[(H[X]-L[X]),(|H[X]-C[X-1]|),(|L[X]-C[X-1]|)]
H[X],L[X],C[X] indicate high, low and close lines