About This is a simple indicator that takes into account two types of realized volatility: Close-Close and High-Low (the latter is more useful for intraday trading).
The output of the indicator is two values / plots:
an average of High-Low volatility minus Close-Close volatility (10day period is used as a default)
the current value of the indicator
When the current value is:
lower / below the average, then it means that High-Low volatility should increase.
higher / above then obviously the opposite is true.
How to use it It might be used as a timing tool for mean reversion strategies = when your primary strategy says a market is in mean reversion mode, you could use it as a signal for opening a position. For example: let's say a security is in uptrend and approaching an important level (important to you). If the current value is:
above the average, a short position can be opened, as High-Low volatility should decrease;