Ulcer Index (UI) shows the volatility decrease risk. It indicates lowering volatility, i.e. a possible drawdown or recovery within a given period.
The indicator has three input parameters:
- Period – calculation period;
- Inverse pair – inverse calculation;
- Applied price – price used for calculations.
The higher the indicator value, the greater the probability of volatility decrease.
Fig.1. Direct calculation
Fig.2. Inverse calculation
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