The Volatility Trigger™ is our proprietary indicator which detects the level below which we expect bearish feedback loops (chain reactions) to start kicking in. Above this level we expect bullish flows that lead to relatively lower market volatility. Underneath the VT, realized volatility (the expected percentage range over a period of time based on historical data with 68.3% confidence) is modeled to expand significantly. In HIRO, a similar calculation is used for what is called the Hedge Wall.
In relation to the other levels, the Volatility Trigger is generally the last major support above the Put Wall. Underneath the VT, realized volatility (the expected percentage range over a period of time based on historical data with 68.3% confidence) is modeled to expand significantly.
Intermediate: Understanding the Volatility Trigger™
If the underlying security is beneath the VT, then market maker hedging flows shift from supporting market prices (and suppressing realized volatility) to trading with market prices (and expanding realized volatility). If the stock is above the VT, then we anticipate lower volatility and more stable underlying movement.
While the VT functions well as support and resistance, it stands out among the other key levels as telling us something very important about the market. If you only want to keep one level in mind, then it should probably be this one.
If the market falls below the VT, then not only can it keep falling forever (as it could below any arbitrary red line) but there is hard data backing this level as a point where the realized range can be expected to expand with decent likelihood.