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Indicators: Fractal Dimension Index

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Automated-Trading 2014.01.27 14:52 

Fractal Dimension Index:

The Fractal Dimension Index determines the amount of market volatility.

The easiest way to use this indicator is to understand that a value of 1.5 suggests the market is acting in a completely random fashion. Deviation from 1.5 indicates a possible profit. The possibility of profit increases when deviation increases. However, be careful - the indicator does not show trend direction! In the state of trend the indicator appears red. With high volatility it is blue. Color change from red to blue means the end of the trend, the market becomes chaotic and volatility increases. Typically, these moments are not long and are followed by a new trend.

Figure 1. The fractal_dimension indicator

Author: Nikolay Kositsin

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