Pair volatility
Which pairs are moving hard, and which are going sideways?
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How IBFX works out volatility
Volatility measures how many pips a pair usually travels in one candle, using the ATR (Average True Range) indicator introduced by J. Welles Wilder. This is IBFX's own calculation, written out in full below; other sites may use a different number of periods, so their figures will not match.
- The true range of a candle is the largest of three numbers: the candle's high minus its low; the distance from the high to the previous candle's close; the distance from the low to the previous candle's close. The last two catch the gap when the market opens away from the previous close, so a small candle right after a gap still counts as movement.
- ATR is a smoothed average of the true range over 14 candles: take the average of the first 14 ranges, then for each new candle ATR = (previous ATR × 13 + the new true range) ÷ 14. This smoothing is Wilder's, and it reacts more slowly than a plain average, so one unusual candle does not throw the figure around.
- Converting to pips: divide the ATR by the pip size of the pair (0.0001; 0.01 on pairs quoted in JPY). The "ATR as % of price" column is the ATR divided by the last candle's close, which lets you compare pairs with different pip sizes, and the table is sorted on that column.
- Latest candle ÷ ATR: the range of the candle that just closed, divided by the ATR of the candles before it. 1.50× means the last candle travelled half again as far as an average one; under 1 means it was narrower than usual.
- The volatility of a currency is the average of the ATR as % of price across the 7 pairs that contain it. You have to convert to a percentage before averaging, because a pip of USDJPY and a pip of EURUSD are not the same unit.
How to read it
- Sizing a stop from volatility: a pair with a large ATR needs a wider stop, or normal swings will take the trade out. A wider stop while keeping the same risk means a smaller position size: work it out with the position size tool.
- Volatility has no direction: the ATR says how far, not up or down. For direction, see the currency strength tool or the currency heatmap.
- Volatility changes with the session: London and US hours are usually wider than the Asian session, so the 1-hour timeframe reads differently at different times of day. The Forex session hours tool shows which session is open.
- These are past figures, not a forecast: the ATR comes from the last 14 candles. Strong news can make the very next candle behave nothing like them.
The candles come from the CXMDirect-Live server, built from CXM's Bid price, and only closed candles are used, so the figures here can differ slightly from another broker's platform. The broker's daily candle opens at 0:00 CXM server time, which does not line up with midnight UTC.