L&S Volatility Index Refurbished

📊 Overview

The L&S Volatility Index Refurbished is a sophisticated volatility indicator that represents a complete reimplementation of the original L&S Volatility concept. This refurbished version was built from scratch to improve functionality while staying true to the original methodology created by Brazilian educators Alexandre Wolwacz (Stormer) and Fábio Figueiredo (Vlad) from L&S Educação Financeira.

✅ The script is available free of charge on the TradingView platform, under the MPL 2.0 open source license, for both personal and commercial use, provided proper attribution is given.

It can be accessed at the following URL:

https://www.tradingview.com/script/QPoJC2hj-L-S-Volatility-Index-Refurbished/

☕ Donations are welcome to support and encourage my work.

Community Validation:

• 187 boosts from the TradingView community
• 1,874 uses across different trading strategies
• Open-source under Mozilla Public License 2.0
• Updated August 19, 2023

🎯 Core Concept

The L&S Volatility Index measures price volatility relative to a moving average, providing traders with insights into market conditions through:

1. Mean Reversion Strategy: Identifying unusual price distances from the average 2. Trend Following Strategy: Confirming when prices are in acceptable regions

Key Insight: When the indicator reaches above 30, it signals "stretched" prices. The closer to 100, the more stretched. When it reaches 0, the price is on its moving average.

⚙️ Technical Architecture

Built on Advanced Library System:

• VolatilityIndicators Library: Core volatility calculations including L&S methodology
• MovingAveragesProxy Library: Access to 19+ moving average types
• Utils Library: Color management and utility functions

Calculation Method:

1. Measures price distance from selected moving average in percentage terms
2. Calculates historical average volatility using two methods:
   • Returns Method: Traditional standard deviation approach
   • Accumulated ATR Method: Enhanced volatility considering implied price movements
3. Computes final ratio between distance and historical volatility

🚀 Revolutionary Improvements

1. Dual Volatility Calculation Strategies

• Returns-based: Traditional volatility using standard deviation of returns
• Accumulated ATR: Enhanced method considering broader price movements and high-impact events
• Flexible switching between methodologies based on market context

2. Advanced Zone System

• Fixed Thresholds: Traditional 30-level system with customizable levels
• Dynamic Zones: Adaptive thresholds using percentile-based calculations
• Hybrid Mode: Combine both systems for comprehensive analysis

3. Multi-Timeframe Capability

• Custom timeframe selection independent of chart timeframe
• Repaint control for real-time vs. confirmed signals
• Enhanced signal generation through timeframe flexibility

4. Professional Customization

• 19 Moving Average Types: Including ALMA, HMA, Jurik, REGMA, and more
• Custom Price Sources: High, Low, Close inputs for precise calculations
• Signal Line: Moving average of the oscillator with multiple MA options
• Normalization: Optional 0-100 scaling for consistent interpretation

🎨 Visual Intelligence System

Advanced Color Coding:

• Directional Colors: Different colors when price is above/below its moving average
• Zone-Based Fills: Visual highlighting when outside thresholds
• Background Fills: Entire chart coloring based on volatility conditions
• Bar Coloring: Multiple options for candlestick colorization

Dynamic Visualization:

• Threshold Density Control: Adjustable line visibility (1-5 density levels)
• Multiple Fill Options: Inside/outside zones with directional awareness
• Professional Charts: Clean, intuitive visual presentation

📡 Comprehensive Alert System

22 Distinct Alert Types:

• Dynamic Zone Alerts (12 types): Entry/exit signals, centerline crosses, signal crossovers
• Fixed Threshold Alerts (10 types): Similar comprehensive coverage for fixed levels
• Cross Alerts: Visual and programmatic signals with shape/character options
• Bar Coloring: Real-time visual feedback on chart

Alert Categories:

• Signal line crossovers inside/outside zones
• Zone boundary crosses (entry/exit)
• Centerline crosses for trend confirmation
• Combined volatility and directional signals

💡 Strategic Applications

Mean Reversion Trading:

• Identify extremely stretched prices for reversal opportunities
• Use high volatility readings (>30) to spot potential turning points
• Combine with dynamic zones for adaptive threshold management

Trend Following:

• Confirm trend strength through volatility analysis
• Use signal line crossovers for entry/exit timing
• Monitor volatility for trend continuation/exhaustion signals

Risk Management:

• Assess market volatility for position sizing
• Identify low volatility periods for breakout preparation
• Use multiple timeframes for comprehensive market analysis

🏆 Competitive Advantages

1. Complete Reimplementation: Built from scratch for optimal performance and clarity

2. Dual Volatility Methods: Unique flexibility in volatility calculation approaches

3. Advanced Zone System: Both fixed and adaptive threshold technologies

4. Professional Customization: Extensive parameter control for any trading style

5. Multi-Timeframe Analysis: Independent timeframe selection capabilities

6. Comprehensive Alert System: 22 different alert types for complete automation

7. Library Integration: Built on professional-grade library ecosystem

8. Educational Foundation: Based on proven Brazilian financial education methodology

📈 Perfect For:

• Volatility Traders: Advanced volatility analysis with multiple calculation methods
• Mean Reversion Strategies: Identifying stretched price conditions
• Trend Followers: Confirming trend strength through volatility analysis
• Risk Managers: Comprehensive volatility assessment for position sizing
• Algorithm Developers: 22 alert types for automated trading systems
• Multi-Timeframe Analysts: Independent timeframe volatility analysis

🔧 Technical Specifications

• Version: PineScript v5
• License: Mozilla Public License 2.0
• Dependencies: VolatilityIndicators/8, MovingAveragesProxy/3, Utils/11
• Parameters: 50+ customizable inputs
• Moving Averages: 19 different types supported
• Alert Types: 22 comprehensive alert conditions
• Visualization: Advanced color coding and fill systems

The L&S Volatility Index Refurbished represents the evolution of volatility analysis, combining traditional methodologies with modern technical innovations to provide traders with unprecedented insight into market volatility conditions.