Synthetic VIX Indicator – Complete Guide to Market Volatility Analysis
The Synthetic VIX Indicator is a powerful market volatility indicator used by traders to measure price fluctuations in financial markets. By analyzing changes in price action, it generates a volatility index that helps traders identify periods of high and low market activity.
Originally developed to track volatility in the S&P 500 index, the Synthetic VIX is now widely used in forex trading, stocks, commodities, and other trading instruments. It works seamlessly on the MetaTrader 4 (MT4) platform, making it a popular choice among retail traders.
One of the biggest advantages of the Synthetic VIX Indicator is its simplicity. Compared to other MT4 volatility indicators, it offers a clear and easy-to-read display of market conditions. This makes it ideal for beginner traders, while still providing reliable insights for advanced and professional traders.
How the Synthetic VIX Indicator Is Calculated
The Synthetic VIX measures volatility using historical price data and a 22-period moving average (MA). The calculation formula is:
Synthetic VIX = (Highest Close over 22 periods − Current Low) ÷ Highest Close over 22 periods
The indicator identifies the highest closing price from the last 22 candles, subtracts the current candle’s low price, and then divides the result by the highest close. Traders may multiply the final value by 100 to scale the indicator for better visual interpretation.
How to Use the Synthetic VIX Indicator in Trading
Traders use the Synthetic VIX Indicator to:
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Identify high-volatility market conditions
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Spot low-volatility or ranging markets
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Improve entry and exit timing
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Combine with trend and momentum indicators for stronger trade confirmation
When the Synthetic VIX value rises, it indicates increasing market volatility. When the value falls, it signals a calmer market environment.
Key Benefits of the Synthetic VIX Indicator
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Easy-to-use MT4 volatility indicator
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Suitable for forex, stocks, and indices
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Effective for both scalping and swing trading
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Ideal for volatility-based trading strategies
