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Charting and Studies User Guide - CQG.com

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Volatility System (VolSys)<br />

Page 337<br />

The Volatility System study was developed by J. Welles Wilder Jr. He explains it in detail in his<br />

New Concepts In Technical Trading Systems.<br />

The Volatility System is a trend-following system.<br />

The paradigm is a stop <strong>and</strong> reverse trading system with a smoothed moving average of the<br />

ranges of previous bars. This average is added to the lowest close (for a buy stop) or<br />

subtracted from the highest close (for a sell stop), which occurred while the stop was active.<br />

The system allows the stops to back off from the market when volatility increases. However,<br />

since the stop is anchored to the highest or lowest close, the backing off is only due to<br />

increases in the volatility.<br />

<strong>Charting</strong> <strong>and</strong> <strong>Studies</strong> <strong>User</strong> <strong>Guide</strong>

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