Synthetic VIX Indicator for MT4

Introduction to the Synthetic VIX Indicator

The Synthetic VIX Indicator is a volatility measure gauge. Its name stands for Synthetic Volatility Index indicator and it helps traders in their technical analysis and in planning their trades in the context of favorable and unfavorable market conditions.

The Synthetic VIX Indicator fits all kinds of timeframes and currency pairs. It is displayed in a separate window placed just below the main trading chart. The default settings can be modified directly from the input tab. Feel free to experiment with the settings and parameters to fit your personal preferences.

Closer look on the Synthetic VIX Indicator

The purpose of the Synthetic VIX Indicator is to monitor price action changes that are used for calculating the volatility index. That volatility index serves as a scale that determines the price volatility levels. Originally, the indicator was developed to track the volatility level of the S&P 500 and later on, it was updated to make it compatible with other financial assets.

Why should a trader be interested in tracking volatility before trading decisions? Volatility refers to how frequently the price of a currency pair changes. The higher the volatility level, the higher the risk of trading such pairs because sharp price moves are most probably underway. Of course, there are situations, where a trader intentionally trades high-volatility pairs, but it’s based on an according strategy in such a scenario.

Formula used to calculate market volatility

In order to calculate market volatility, the Synthetic VIX Indicator uses historical data from previous sessions. Namely, it applies a 22-period Moving Average to estimate the market volatility level of a currency pair. The exact formula is the following:

Synthetic VIX value = [{Highest(Close,22) – Low}/{Highest(Close,22)}]

Let’s explain it. First, it takes the value of the highest close price of the last 22 bars and then subtracts the current bar’s low. Then, it divides the result by the value of the highest close price of the last 22 bars. In the end, the result can be multiplied by 100 to scale the indicator readings (if required).

Example charts

Check charts of the Synthetic VIX Indicator in action.

Synthetic VIX Indicator Example Chart 1

On the left side of the chart, we can see a clear uptrend and stable volatility. Later on, volatility shoots up (marked in the red zone), and then the price falls, breaking the moving average. In this example increase in volatility resulted in a change of the trend direction.

Synthetic VIX Indicator Example Chart 2

In this example, on the left and on the right, we can see relatively stable volatility. However, in the middle of the chart, there is a big change in volatility, resulting in huge swings of the price – first to the top and then to the bottom.

Synthetic VIX Indicator Example Chart 3

In the above chart, we can see two areas of volatility increase. The first one is a single big candle (very likely an important economic news occurred). The second red area corresponds with the meaningful fall of the price.


These are available settings.

Synthetic VIX Indicator Settings

How to set up the Synthetic VIX indicator in MetaTrader (MT4)?

Installation Guide

Download the Synthetic VIX.rar archive at the bottom of this post, unpack it, then copy and paste the Synthetic VIX.ex4 or Synthetic VIX.mq4 indicator files into the MQL4 folder of the Metatrader 4 trading platform.

You can gain access to this folder by clicking the top menu options, which goes as follows:

File > Open Data Folder > MQL4 > Indicators (paste here).

Now go to the left side of your MT4 terminal. In the Navigator find the gauge name, right-click it and select Attach to the chart.

Synthetic VIX Indicator in MT4 Trading Platform Navigator

Summary Of That Forex Indicator

The Synthetic VIX indicator is well worth adding to your trading collection. A good forex indicator will most probably enhance your chance of success. Nonetheless, remember about having realistic expectations. Just like any other technical analysis tool, is not capable of providing accurate signals 100% of the time. Thus, this forex indicator provides false signals occasionally. Its performance will vary significantly depending on market conditions. Feel free to develop your own trading system based around it. Don’t forget that we still have more great free forex MT4 indicators to download and try.

Download Free MT4 Synthetic VIX Indicator

To download the Synthetic VIX Indicator for Metatrader 4 (MT4) for free just click the button below:

Synthetic VIX Indicator Free Download

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