It’s all Relative Ranges

Relative Ranges for NinjaTrader 8

In this month’s Indicator Spotlight, we’re looking at the Relative Ranges indicator for NinjaTrader 8. The Relative Ranges indicator can be used to address changes in volatility between the overnight, European and US regular sessions. Watch the video or continue reading below to learn more:

Average True Range vs. Relative Ranges

A standard volatility indicator, such as the Average True Range, can be used to analyze average ranges. However, you will see a steady increase during the European and US trading sessions, and a fall-off during the overnight. The reason is that the European and US sessions are compared to the overnight session, which is comparatively sees very little movement.

This issue can be solved with our NinjaTrader Relative Ranges indicator. It allows you to compare the average ranges at a specific time of day, with the average volatility of the past N days. Therefore, you may compare the overnight ranges with the overnight session. Likewise, the volatility of the European session with the European session, and the U.S. regular session with the U.S. regular session.

Relative Ranges for NinjaTrader 8
Relative Ranges for NinjaTrader 8

Also, the Relative Ranges indicator allows you to compare the average volatility at a specific time and day of the week. This is useful for days and times where news reports are issued. For example, the weekly petroleum and natural gas reports are usually released on specific weekdays. Today’s range is then compared with the average volatility calculated for the same day of the week over the N preceding weeks.

Accordingly, our NinjaTrader Relative Ranges indicator will put you in a better position to identify increasing / decreasing volatility. This in turn will help you determine whether to pursue breakout strategies when the cumulated relative ranges are above average. Alternatively, you can use it for reversal setups during sideways markets when ranges are below average.

Specific indicators for those purposes are available from our premium suite. The Auction Bars indicator seeks to identify reversal patterns plotting in a higher timeframes. This approach is useful during sideways / consolidating markets. Furthermore, the Zerolag Oscillator seeks to identify early trend retracments and momentum setups, more information on that here.

Additionally, Relative Ranges indicator can be used in combination with trend filters, trend analysis, momentum oscillators and/or support / resistance indicators. Please review the Trend Filters, Trend Analysis and Momentum Oscillators categories. Support / resistance indicators are located the Session Tools and Fibonacci categories. Specifcally, you may consider the Adaptive Laguerre, ADX, Know Sure Thing or the Heikin Ashi candles for determining market trends.

To download the Relative Ranges indicator, visit the volatility indicators category of our library now:

The indicator is available for NinjaTrader 8.