Complete Guide: How to Use the Volatility Models
Table of Contents
Chapter 1:
Introduction
Introduction to Volatility Models
Volatility Models provide a statistical approach to understanding market movements by offering volatility-based ranges for different time frames in ThinkOrSwim.
What You'll Learn:
- What are Volatility Models?
- When and how to use Volatility Models?
- Understand the difference between the hourly, daily, and weekly price movement ranges.
In this chapter, you'll explore how these models work and how to apply them to improve your trading strategy by analyzing volatility patterns.
We'll do a deeper dive into setups in later chapters.
What Are Volatility Models?
Volatility Models are sophisticated tools designed to project expected volatility ranges at various time intervals—hourly, daily, and weekly—based on historical data. These models utilize stochastic processes and probability distributions to forecast where price is likely to fluctuate, offering a statistically-informed edge in predicting potential reversals or expansions in market movement.
Instead of simply plotting past price movement, these models calculate volatility behavior using historical patterns, enabling you to anticipate the potential amplitude and frequency of price deviations. This makes them particularly effective in assessing the market's volatility profile in real-time, helping you determine optimal trade entries and exits.
Key Features:
- Hourly Volatility Models: These models refresh each hour, giving you a dynamic view of expected price volatility for that specific hour.
- Daily and Weekly Volatility Models: Broader timeframes help you capture long-term volatility trends while tracking the daily and weekly rhythm of market expansions and contractions.
How Volatility Models Work
Volatility Models are built upon statistical principles, analyzing historical volatility distributions to create a probabilistic framework for future market behavior. By evaluating past price movements and volatility conditions, they generate volatility ranges that predict potential market fluctuations at any given time. These ranges reflect the natural ebb and flow of market volatility, offering a clearer view of when price is likely to reverse, expand, or contract.
By using Volatility Models, you gain a significant advantage in:
- Identifying high-probability volatility zones, where market reversals or consolidations are likely to occur.
- Understanding market sentiment through volatility expansion or contraction patterns.
- Timing your trades by analyzing statistically significant volatility points, rather than relying solely on price levels.
When to Use Volatility Models?
Volatility Models are suitable across all asset classes—stocks, futures, options—and are particularly useful in markets where volatility can change rapidly. Use them to:
- Spot periods of heightened volatility, where breakouts or sharp reversals are more likely.
- Identify calm, low-volatility periods, signaling consolidation and range-bound trading conditions.
Volatility, much like waves, moves in cycles of expansion and contraction. Volatility Models allow you to visualize these cycles and make informed trading decisions based on where price is expected to move within these probabilistic boundaries.
Download this week's latest update:
The hourly, daily, and weekly Volatility Models are updated every single week, rain or shine.
Chapter 2:
Installation
Importing Volatility Models into ThinkOrSwim
In this chapter, you’ll learn how to import and integrate the Volatility Models into your ThinkOrSwim platform. This is the first step to visualize hourly, daily, and weekly volatility ranges on your charts, tailored to stock and ETF markets, to enhance your trading strategy.
What You'll Learn:
- How to download and import Volatility Models into TOS
- Custom settings for optimal use
- How to verify that you are using the latest volatility data
By the end of this chapter, you will have the Volatility Models fully integrated into your ThinkOrSwim charts, ready to analyze stock and ETF market volatility in real-time.
Step 1: Download Volatility Model Files
To begin, download the latest files for the asset classes your Volatility Models support. Regular updates ensure that your models reflect current market conditions, so always use the most recent files.
- Log in to your account on the VolatilityModels.com website.
- Go to the Downloads section of your account.
- Select the file(s) corresponding to the asset class you’re trading:
- Stock Volatility Model
- ETF Volatility Model
- Download the necessary file(s) to your computer.
These files are tailored to provide accurate volatility projections for stocks and ETFs, reflecting each market's unique characteristics.
Step 2: Import Volatility Models into ThinkOrSwim
Now that you have the files, you’ll import them into ThinkOrSwim for immediate use:
- Unzip the file(s) from VolatilityModels.com to access the indicator files.
- Open ThinkOrSwim, and go to the Studies menu at the top of the platform.
- Click Edit Studies and choose the Import option from the bottom of the window.
- Locate and select the extracted Volatility Model file(s) to import.
- After importing, the Volatility Models will appear in your list of studies.
With these steps, the Volatility Models are successfully added to your ThinkOrSwim platform and ready to be applied to your trading charts.
Download the Latest Update
Step 3: Adding Volatility Models to Your Charts
With the models imported, follow these steps to overlay them on your chart for real-time analysis:
- Open a chart for the stock or ETF you want to analyze.
- Go to the Studies menu at the top, then search for the Volatility Model you just imported (e.g., "Stock Volatility Model").
- Select the model and click Add Selected to display it on your chart.
Your chart will now include the volatility ranges for the selected asset class and timeframe, giving you a live view of the market's volatility dynamics.
Step 4: Configuring the Volatility Models
The Volatility Models are designed to function optimally without additional configuration, but a few settings can be customized to suit your personal trading preferences:
- Extended Hours Settings:
- For stocks and ETFs, you may wish to disable extended hours if pre-market and after-hours data do not align with your trading strategy.
- Enabling extended hours may be useful for tracking pre- and post-market volatility when significant trading occurs outside regular hours.
- Chart Display Settings:
- You can adjust the color of the volatility ranges (clouds) to fit your chart’s background and style. By default, green clouds indicate lower volatility zones, and red clouds signify higher volatility zones. Customize these as needed for better visibility.
These adjustments help tailor the models to your trading style while keeping the core statistical framework intact.
Step 5: Verifying the Latest Volatility Data
The data in Volatility Models is updated weekly to reflect current volatility conditions, so it’s essential to stay up-to-date:
- Each Sunday, log in to your VolatilityModels.com account and download the latest files.
- Repeat the import process outlined above, selecting to overwrite the previous week’s data in ThinkOrSwim.
- Verify the date of the update by checking the date range in the indicator’s settings.
This regular update process ensures that your Volatility Models reflect the latest market conditions, enabling you to make data-driven trading decisions.
Chapter 3:
Hourly Volatility Models
How to Use Hourly Volatility Models
This chapter guides you through the structure and interpretation of hourly volatility models. Understanding these models will equip you to predict potential price reversals and expansions within each trading hour, giving you a refined sense of where the market holds a volatility edge.
What You'll Learn:
- How to read and interpret the hourly volatility model.
- The significance of upper and lower volatility levels.
- Practical ways to apply the hourly model in real-time trading.
The hourly model draws on proprietary calculations, generating upper and lower volatility levels for each hour that highlight zones of probable market activity and reversals.
Structure of the Hourly Volatility Model
Each hour of the trading day has designated upper and lower volatility levels that act as boundaries for potential price movements.
These levels are derived using statistical models based on historical volatility data and are unique to each asset.
Here’s a breakdown of the different components you’ll see within each hour:
- Upper Levels (L3, L2, L1): Representing varying degrees of high volatility boundaries.
- L3 (High): The most conservative upper level, indicating the maximum expected price movement for that hour.
- L2 (Average): Reflects the average upper bound where price typically slows or reverses.
- L1 (Low): The initial threshold where slight reversals may occur in an upward trend.
- Lower Levels (L1, L2, L3): Mirroring the upper levels, these boundaries define the lower range of volatility.
- L1 (Low): Marks the boundary where minor downward reversals may start.
- L2 (Average): A more substantial lower boundary for expected price movement.
- L3 (Low): A conservative lower threshold where the probability of a reversal is highest.
Each of these volatility levels represents a calculated range for potential price activity. When price touches or approaches these levels, it indicates where volatility is expected to reach its maximum or minimum for that hour, offering high-probability entry or exit points.
How to Read the Hourly Model
The hourly volatility model operates on a rolling basis, adjusting its volatility levels as each hour progresses. The model runs on a clock, using specified hourly intervals (9:00 - 10:00 AM, 10:00 - 11:00 AM, etc.) to keep volatility ranges current:
- Upper Volatility Edge: When price reaches the upper volatility levels (L1, L2, L3), it signals an overbought condition from a volatility perspective. This is where we often see a reversal or pullback as price tests the upper bounds of expected movement.
- Lower Volatility Edge: When price nears the lower volatility levels, it reflects an oversold condition. These levels are ideal zones to assess for potential upward reversals, as price has reached the lower bound of its expected range.
By examining each hour’s upper and lower levels, traders can assess high-probability points for reversals or temporary breaks in momentum.
If price remains within the L1 and L3 levels without breaching, the market is within a typical volatility range.
Similarly, when price reaches L3, the probability of a strong counter move increases.
If we exceed L3, the market is exceeding normal volatility ranges, and it's best to skip trading that particular stock or ETF.
Normal Volatility:
Volatility Setup
Skip This Market
Practical Examples for Scalping
Example 1: Scalping a Reversal
Suppose you’re watching a stock that reaches the upper high (L3) level around 10:30 a.m.
The price has shown momentum but begins to stall as it hits this resistance zone. A scalper can enter a short position, anticipating a quick pullback.
The key to success in this trade lies in reading the price action.
Look for signs of weakening momentum:
- Smaller candlesticks
- Longer wicks
- Engulfing reversal candles
The exit strategy could be set just above the average high (L2) level or a defined point within the cloud to capture a rapid profit.
By exiting before significant support or the mid-range, scalpers can lock in gains while minimizing risk.
Example 2: Quick Long Entry
If a stock reaches the lower low (L3) level during the 2:00 to 3:00 p.m. timeframe, and historical data suggests this is a strong support zone, scalpers can place a buy order.
To validate this setup, look for corroborating signals such as RSI dipping into oversold territory or a bullish reversal candlestick pattern like a hammer.
The goal is to catch the bounce and exit as the price rebounds to the lower average (L2) or slightly beyond.
This approach maximizes profit while minimizing time exposure, reducing the risk associated with extended market fluctuations.
Scalpers must keep a close watch on volume—an increase in buying volume near the L3 level adds confidence to the long entry.
Practical Examples for Swing Trades
Example 1: Swing Trade Setup with Confirmation
A stock trending upward begins a pullback and reaches the lower low (L3) during mid-day trading. Swing traders can view this as an entry point, supported by additional signals such as volume spikes or bullish candlestick patterns.
Look for a convergence of factors like MACD starting to turn positive or a higher low being formed compared to previous pullbacks.
Once the trade is entered, swing traders can set an initial stop just below the L3 level, allowing some buffer for market noise.
The goal would be to ride the wave until the price approaches the upper high (L3) level, capturing a multi-hour or multi-day move. Managing the trade with a trailing stop as the price rises can help secure profits as the trend develops.
Example 2: Swinging a Breakout
During periods when the price stays within the average range cloud for several hours, swing traders can prepare for a breakout setup.
If the price breaks above the upper average (L2) level and sustains this movement with increasing volume, it may signal a new upward trend.
Traders should watch for a confirmation such as consecutive higher closes above the L2 level or a bullish crossover on the stochastic indicator.
Entering a position as the price clears the average high and aiming for the upper high (L3) as a target allows swing traders to capitalize on continued momentum.
Using Fibonacci retracement levels in conjunction with the volatility model can help set secondary targets and plan for partial exits to manage risk.
Applying Volatility Models for an Edge
The strength of hourly volatility models lies in their ability to provide a probabilistic advantage. Using these models, you can:
- Identify optimal trade entry points when the price nears lower volatility levels during bullish setups.
- Determine strategic exits by watching when the price reaches upper levels in a trending market.
- Avoid choppy conditions by recognizing when the price remains within the average range cloud, indicating a lack of significant volatility edge.
- Use overlapping signals: Combine the hourly volatility model levels with other technical indicators such as RSI or MACD to confirm setups for higher-confidence trades.
- Refine stop-loss placement: Utilize the hourly levels to place stops just outside significant volatility ranges, minimizing the risk of premature exits.
Advanced Tips for Combining with Other Indicators
For added precision, traders can pair hourly volatility models with momentum oscillators or moving averages:
- Scalping with RSI: Enter scalping positions when the price nears an hourly upper or lower level and RSI signals overbought or oversold conditions. If RSI diverges from price action at the L3 level, this can be a strong signal for a reversal.
- Swing Trades with Moving Averages: Use moving averages to confirm trends when the price is at the lower or upper volatility level. If the price is above the 50-period moving average and reaches the lower high (L1) level, it could signal a strong buy zone for a swing trade. A crossover between the 20- and 50-period moving averages near these levels adds further validation.
- Volume Analysis: Pay attention to volume spikes at key hourly volatility levels. Increased volume at these levels often signals the strength of a move and can validate entry points for both scalping and swing trading strategies.
Practical Example: Trading the S&P 500 ETF (SPY)
Assume you’re trading the SPY and notice the price moving toward the hourly L3 upper level. The model indicates this is the expected upper bound for volatility during that hour, suggesting a high likelihood of reversal. As price approaches this upper volatility edge, you might look for signs of resistance—such as lower trading volume or a loss of upward momentum—before placing a short trade.
Alternatively, if SPY is approaching the lower L3 level, the hourly volatility model suggests this could be an oversold point with high reversal probability. Here, you could watch for signs of support and, if confirmed, consider entering a long position.
Download the Hourly Volatility Models
Chapter 4:
Similarities
Exploring Important Parallels Between Pranic Healing and Reiki
What You'll Learn:
- The major areas of alignment shared by both systems
- How the modalities converge in philosophy and outcomes
- Why layering approaches can have added benefits
This overview elucidates the significant convergence between these subtle energy therapies.
From Amanda's progresses through Pranic Healing sessions to hearing accounts from Reiki practitioners, the significant power of vital energy therapies was undeniable - although the two modalities differed practically.
Intrigued to deeply understand their intersections, I invested time learning Reiki's spiritual foundations from seasoned mentors, researching scientific analyses, and cross-training in workshops worldwide alongside my Pranic Healing credentials.
Stepping back, I realized just how profoundly Reiki and Pranic Healing align in foundational premises and ultimate aims, despite arising centuries and continents apart from completely different lineages!
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Want to clear out blockages and clear energy pathways to achieve your goals? We can help build a healing plan that helps you get there.
Utilizing Vital Life Force Energy:
Both modalities leverage prana/chi/ki as the subtle animating force that sustains health and precipitates healing flows when transmitted to correct distortions in recipients' personal energy fields.
Skilled practitioners act as vessels to accelerate innate self-healing capacities. Though terminology contrasts, the concept retains core meaning.
Holistic, Integrative Health Approach:
Aligned with ancient medicinal roots, the two approaches view wellbeing from an holistic paradigm that addresses emotional and energetic root causes long before physical symptoms arise in the human experience.
Hence therapies rebalance the whole system rather than just target isolated symptoms in silos.
Customized Self-Care Recommendations:
Pranic Healing and Reiki practitioners emphasize sustainable lifestyle adjustments that reinforce subtle energy session work.
Recommendations span nutritional and supplemental support to biochemistry, breathwork, meditation and mindfulness practices to regulate nervous system responses, conscious communication and relationship habits for emotional harmony, and movement therapies like yoga, tai chi or qigong to stimulate fluid pranic flow throughout the body's energy channels.
Inducing Biochemical Relaxation Responses:
Both modalities can rapidly induce deep restorative states characterized by decreased heart rate, blood pressure, metabolic activity and stress hormones.
These parasympathetic changes help override habitual "fight-or-flight" mechanisms that become overloaded by chronic mental anxieties or emotional trauma lodged in the system. By soothing frayed nerves, the modalities return recipients to optimal function.
Self-Empowerment Through Disciplined Self-Care:
Once sufficiently attuned, recipients can positively influence their own and others' health through disciplined subtle energy self-care regimens without dependency on appointments.
Preventative daily energetic hygiene protects against recurrence of common complaints. Recipients become active stewards rather than passive passengers in their journey, saving time, expenses and needless suffering.
Both traditions actively encourage daily self-treatment alongside formal sessions.
Catalysts for Spiritual Growth and Life Direction:
Documented patient accounts suggest that committing to either modality consistently over months or years serves as a catalyst for profound personal evolution.
Beyond tangible healing from physical discomforts, recipients regularly describe experiencing deeper alignment with inner purpose and life direction, enhanced compassion, environmental sensitivities and a sense of self-actualization or embodiment of highest nature.
Potential for Powerful Synergy When Combined:
Due to such significant overlap philosophically around subtle energy principles, those who strongly resonate with either Reiki or Pranic Healing may still derive great value from exploring complementary practices from the system they did not initially train in.
An integrative approach leveraging both therapies in a holistic self-care regimen often has additive and even synergistic wellbeing benefits worth assessing through experience.
Vital Energy Impacts Physiology:
Though subtler than pharmaceutical agents, both modalities have measurable impact on human physiology and neurochemistry. Controlled trials demonstrate pranic transmission creating positive changes in variables like heart rate variability, blood pressure regulation, EEG states, stress hormone levels, immune function indicators, neuroplasticity growth factors, and epigenetic signaling pathways involved in the healing process.
Innate Drive Towards Self-Healing:
Essentially, the modalities trust that within every living organism lies an innate evolutionary impulse towards wholeness, harmony and wellbeing.
By removing interference in the energy systems and restoring proper conditions through rebalancing techniques, the body can heal itself on all levels through activation of inner healing wisdom.
Treatments support rather than replace this organic self-regulatory drive.
Non-Invasive Methods:
In essence, both subtle energy practices are non-invasive, working to support bodily systems in coming back into alignment naturally rather than forcibly manipulating them.
Mild side effects occasionally manifest as part of a detoxification process but protocols prove safe for most. Main contraindications lie around avoiding over-energizing malignant cells.
Paradigm Shifts in Science Underway:
Though originating from ancient concepts of vital energy, both Reiki and Pranic Healing operate under different paradigms than conventional medicine, which lacks explanations for phenomena like the placebo effect, psychosomatic conditions, spontaneous remission etc.
Hence sophisticated energy modalities present opportunities to advance scientific frontiers towards a broader model incorporating consciousness and nonlocal healing.
Pioneering thinkers are taking note as research mounts.
In summary, while Reiki and Pranic Healing differ considerably in certain practical applications, they fundamentally share substantial similar ground around utilizing universal life force to holistically restore wellness by correcting imbalances in recipients' personal energy fields. Further comparative analyses will uncover additional key intersections worth acknowledging.
Chapter 5:
Differences
Contrasting Reiki and Pranic Healing Approaches
What You'll Learn:
- Belief and technique variations
- Training commitments and client experiences
- Why Pranic Healing offers localized practitioners more flexibility
By the end of this chapter, you'll know the key differences between Pranic Healing and Reiki, to pick which one is best for you.
While Reiki and Pranic Healing fundamentally share substantial philosophical common ground around utilizing life force energy for holistic healing, they each have their own share of differences as well.
For starters, Reiki emphasizes spiritual preparation, trusting the unconditional love vibration to flow intuitively to whatever areas need realignment for a client's highest good in that moment.
Read a different way, that implies less control over the energy flow in Reiki, when compared to Pranic Healing. That's why Pranic Healing is more effective for targeted therapies, and specific goals.
Pranic Healing leverages intricate energy anatomy frameworks mapped through spiritual research and scientific verification experiments.
Targeted cleansing protocols address specific sites of imbalance and toxicity for efficient disease eradication.
Reiki sessions involve gentle touch positioning with practitioners encouraging interoceptive awareness in clients to foster embodiment and mindfulness.
Pranic Healing rapidly scans and manipulates the biofield from inches away with analytical precision rather than sensory attunement focus.
Becoming a Reiki Master with licensing to attune students takes 1-3 years through informal oral tradition attunement methods passed down within various teacher lineages.
Pranic Healing has systematic, structured certification programs at levels like Basic, Advanced, Pranic Psychotherapy and full Master. Each phase benchmarks core competencies around subtle energy manipulation with deliberate mentor supervision over rigorous 4-7 year journeys before permitting practitioners to teach others.
While Reiki always requires in-person contact with clients due to reliance on tactile energy transmission through the hands, Pranic Healing uniquely can be delivered successfully remotely even over considerable distances using certain advanced protocols.
This flexibility allows leveraging the most talented energy healers globally based on reputation and track records rather than solely relying on whoever happens to be available locally in one's vicinity.
Advanced Pranic Healers trained certain techniques to bridge space barriers.
Furthermore, Reiki techniques move energy to wherever guides intuitive sensing in recipients' fields to unwind blockages and induce overall systemic balance through deep relaxation.
Pranic Healing precisely targets only identified problem areas based on systematic point-by-point investigation, deliberately focusing amplified subtle energy transmission only to locations of imbalance, toxicity and congestion in the human aura or chakras in order to efficiently achieve eradication of energetic roots of disease.
Hence Reiki seeks to align the whole body holistically as recipients process traumatic memories or limiting beliefs arising through embodiment mindfulness while Pranic aims to cure root energetic-emotional causes of illness rather than just temporarily relieve symptoms.
Distilling further, the two energy healing practices have fairly significant philosophical and practical differences.
Beliefs and Perspectives:
- Reiki emphasizes personal spiritual development, trusting energy flows wherever most needed for a patient's highest good based on the universal wisdom beyond linear mind.
- Pranic Healing focuses on technical subtle energy manipulation practices assessed through a framework of complex energy anatomy systems revealed by Divine guidance.
Techniques and Treatment Methods:
- Reiki techniques use gentle, loving touch to induce interoceptive and psychosomatic awareness in clients as unconditional energy shifts blockages. Practitioners passively channel through intuitive openings.
- Pranic Healing involves active non-contact manipulations of the human biofield based on systematic point-by-point investigation and techniques tailored to clear specific imbalanced chakras or areas.
Training and Initiation:
- Becoming a certified Reiki Master through oral tradition lineages takes 1 to 3 years involving informal attunement processes with loose structure between teachers.
- Pranic Healing has formal structured certifications at levels like Basic, Advanced, Pranic Psychotherapy and Master with each phase spanning rigorous supervised apprenticeship for 4 to 7 years based on demonstrated competencies.
- Time commitments and prerequisite skill sets differ greatly with Reiki focused more on spiritual mindset and embodiment whereas Pranic emphasizes technical proficiency in controlled energy projection, manipulation and healing applications.
Treatment Session and Client Experiences:
- A Reiki session often begins with intake questions on medical history and therapeutic goals followed by gentle touch via hand placements over major endocrine glands, organs, meridians and chakras with sessions ranging from 30 minutes to over an hour. The emphasis rests on whole body-mind relaxation and space for inner wisdom to surface naturally guiding the energy.
- Pranic Healing begins with a triage-style rapid assessment of the 11 major chakras, aura layers and vital organs through clairvoyant scanning. Systematic point-by-point investigation identifies blockages for focused projected healing from inches away rather than direct contact. Most sessions seek to diagnose root causes and achieve eradication of diseases rather than temporary abatement of discomforts. Hence ambiance tends towards clinical.
In essence, while Reiki and Pranic Healing undoubtedly share substantial common ground energetically, they differ notably in practical applications and approaches.
Examining these key distinctions allows seekers to determine which system or combination thereof suits their healing objectives and personal preferences.
Chapter 6:
Conclusion
Navigating Your Path to Energy Healing: Reiki or Pranic Healing?
What You'll Learn:
- The essence of choosing between Reiki and Pranic Healing
- How to align your personal needs and preferences with the right modality
- The importance of intuition and personal resonance in your healing journey
You'll discover how to make an informed decision that best aligns with your unique path to wellness, leveraging the powerful benefits of energy healing!
In essence, Reiki and Pranic Healing utilize life force energy for holistic healing, but have different origins and practical approaches.
Reiki channels energy intuitively through gentle touch to induce deep relaxation and realignment.
Pranic Healing rapidly scans and manipulates the biofield from a distance to precisely target energetic causes of illness.
The modalities contrast across beliefs, techniques, training and session format. Yet both can activate profound self-healing capacities and catalyze spiritual growth.
Finding which approach most resonates depends on personal preferences and needs.
Some may discover value in purposefully blending Reiki's nourishment with Pranic Healing's efficient precision for customized care.
By understanding key differences illuminated here while remaining open to direct experience, one can determine which system or fusion approach best supports their wellbeing goals.