Volatility Ratio

DEFINITION of 'Volatility Ratio'

A technical indicator used to identify price ranges and breakouts. The volatility ratio uses a true price range to determine a stock's true trading range and is able to identify situations where the price has moved out of this true range.

BREAKING DOWN 'Volatility Ratio'

The volatility ratio is typically signified with a primary line on a chart, apart from price bars. Although there is no hard-and-fast number used to determine when a breakout is probable, a volatility of 0.5 is most often used by technical traders.