Volatility Close-to-Close – FX Replay Guide

The Close-to-Close Volatility indicator in FX Replay measures market instability based on the standard deviation of log returns between candle closes. It’s a key tool for understanding market conditions, adjusting trade timing, and filtering risk during strategy development.

How to Use It in FX Replay

➕ Add the Indicator

• Go to the Indicators panel
• Search for “Volatility Close-to-Close” or “Standard Deviation of Log Returns”
• Apply it to your chart and set a lookback period (e.g., 10, 14, or 20 sessions)

What It Shows

• Plots a volatility value derived from log returns of candle closes
• Higher values = unstable, fast-moving market
• Lower values = calm, range-bound conditions

Trading Applications

Trade Timing

• Avoid entries during volatility spikes if your system depends on clean breakouts
• Look for reversals when volatility spikes after extended directional runs

Position Sizing

• Reduce size in high-volatility zones
• Increase size during quiet, compressed ranges to exploit breakout moves

Volatility Filter

• Use as a conditional entry rule
• Example: “Only enter trades when volatility is below 2.5” (custom to asset)

Use in Strategy Development

• Tag trades by volatility context: High vs. Low Volatility
• Evaluate if your strategy performs better when volatility is rising, falling, or flat

Combine With Other Tools

• 🔗 VWAP → to add volume-based context
• 🔗 ATR → for stop-loss sizing
• 🔗 SMMA → for trend filtering

Pro Tip

In FX Replay, Close-to-Close Volatility acts as a pre-trade filter:

• If volatility is declining into a breakout, expect more reliable follow-through
• If volatility is spiking, anticipate mean-reversion, liquidity grabs, or sharp pullbacks

Best Used With

• Session-based strategies (London/NY opens)
• TEMA or RSI for momentum alignment
• FVG zones or liquidity sweeps for precise entries