ThE hAnDbook of TEChnICAl AnAlysIsWe may therefore, represent volatility in various orders of change, where:■ (^) First‐Order Change—Represents a simple change in price that is not consid-
ered volatile with respect to the first measure of volatility and is characterized
by a constant rate of change in price
■ (^) Second‐Order Change—Represents a change in the rate of change in price,
which is considered to be volatile with respect to the first measure of volatility,
and is characterized by acceleration or deceleration in price
■ (^) Third‐Order Change—Represents “a change in the change in a rate of change
in price” which is considered to be extremely volatile with respect to the first
measure of volatility and is characterized by an increasing rate of acceleration
or deceleration in price.
We may therefore track volatility on the charts by trying to identify change in the
increasing angular increment of price, measured over equal durations. See Figure 21.5.
figure 21.4 Different Changes in the Rates of Change in Price.
figure 21.5 Increasing Angular Increment Indicating Volatility with Respect to the
First Measure of Volatility on the Daily Gold Chart.
Source: MetaTrader 4