QFChart - Williams VIX Fix Daily Demo

About Williams VIX Fix Indicator

What is the Williams VIX Fix?

The Williams VIX Fix (WVF) is a volatility indicator created by renowned trader Larry Williams to replicate the behavior of the CBOE VIX (Volatility Index) for any market or asset. While the VIX measures implied volatility of S&P 500 options, the Williams VIX Fix uses price action alone to identify fear and panic selling, making it applicable to stocks, forex, cryptocurrencies, and commodities. High WVF values indicate extreme selling pressure and potential market bottoms, while low values suggest complacency and stability.

How the Williams VIX Fix Works

The indicator measures the distance between the current low and the highest close over a lookback period:

WVF = ((Highest Close over Period - Current Low) / Highest Close) × 100

The calculation captures the key insight: when prices fall sharply from recent highs, fear increases. The indicator includes several components:

WVF Histogram (Colored Bars) - The main volatility reading:
- Lime (bright green) - High volatility / panic selling (potential reversal zone)
- Gray - Normal volatility / stable market conditions
Range High (Lime Line) - Upper threshold based on 85th percentile of historical WVF values
Range Low (Orange Line) - Lower threshold for filtering noise
Upper Bollinger Band (Aqua Line) - Statistical upper bound (Mean + 2 Std Dev)

Trading Signals

The Williams VIX Fix generates signals when extreme fear presents buying opportunities:

Buy Signal (Lime Histogram) - WVF crosses above the Upper Band or Range High
- Indicates panic selling and potential capitulation
- Often marks short-term bottoms in downtrends
- Best used as a counter-trend entry signal
No Signal (Gray Histogram) - WVF below thresholds
- Normal market conditions, no extreme fear
- Uptrends typically show mostly gray bars
- Wait for lime bars to appear before considering entries

Key Parameters (Customizable)

This implementation includes adjustable parameters for different trading styles:

Lookback Period (pd = 22) - Period for finding the highest close
Bollinger Band Length (bbl = 20) - Period for calculating the mean and standard deviation
Standard Deviation Multiplier (mult = 2.0) - Controls the upper band sensitivity
Percentile Lookback (lb = 50) - Period for percentile calculations
High Percentile (ph = 0.85) - Threshold for extreme readings (85% = top 15% of values)
Low Percentile (pl = 1.01) - Lower bound filter (99% of values)

Trading Strategies

Bottom Picking - Buy when WVF spikes to lime (high fear), exit when returning to gray
- Works best in ranging or correcting markets
- Combine with support levels for confirmation
Divergence Trading - Look for bullish divergence
- Price makes lower lows, but WVF makes higher lows
- Suggests selling pressure is weakening
Volatility Filter - Use WVF to time entries for other strategies
- Avoid buying when WVF is low (complacency)
- Wait for fear spikes (lime bars) before deploying capital
Risk Management - Exit long positions when WVF remains low for extended periods
- Prolonged gray readings near market tops suggest distribution
- Lack of pullbacks can indicate an overheated market

Why the Williams VIX Fix Works

The indicator capitalizes on market psychology:

Fear Measurement - Sharp drops from recent highs trigger panic selling
Mean Reversion - Extreme fear is often followed by relief rallies
Capitulation Detection - Lime spikes mark when weak hands exit positions
Universal Application - Works on any asset without needing options data

Williams VIX Fix with QFChart & PineTS

This demo showcases the full calculation and visualization of the Williams VIX Fix using PineTS and QFChart. PineTS computes the indicator across 500 daily BTC/USDT candles from Binance, calculating highest closes, standard deviations, percentiles, and dynamic thresholds. QFChart renders the histogram with color-coded bars and threshold lines in a separate pane below the price chart.

Technical Implementation

The indicator demonstrates several advanced features:

Complex Calculations - Combines lookback highs, Bollinger Bands, and percentile analysis
Configurable Inputs - Uses input.int(), input.float(), and input.bool() for customization
Conditional Coloring - Histogram color changes based on threshold logic
Multi-Line Plot - Displays range high, range low, upper band, and histogram simultaneously
Daily Timeframe - Optimized for daily charts (500 days = ~1.5 years of data)

Indicator Code

Here's the core calculation logic:

const WillVixFix = (context) => {
    const pd = input.int(22, 'LookBack Period Standard Deviation High');
    const bbl = input.int(20, 'Bolinger Band Length');
    const mult = input.float(2.0, 'Bollinger Band Standard Devaition Up');
    const lb = input.int(50, 'Look Back Period Percentile High');
    const ph = input.float(0.85, 'Highest Percentile - 0.85=85%');

    // Main WVF calculation
    const wvf = ((ta.highest(close, pd) - low) / ta.highest(close, pd)) * 100;

    // Bollinger Bands
    const sDev = mult * ta.stdev(wvf, bbl);
    const midLine = ta.sma(wvf, bbl);
    const upperBand = midLine + sDev;

    // Percentile thresholds
    const rangeHigh = ta.highest(wvf, lb) * ph;

    // Color logic: lime if extreme fear, gray otherwise
    const col = wvf >= upperBand || wvf >= rangeHigh ? color.lime : color.gray;

    plot(rangeHigh, 'RangeHigh', { color: 'lime' });
    plot(upperBand, 'UpperBand', { color: 'aqua' });
    plot(wvf, 'WilliamsVixFix', { style: 'histogram', color: col });
};

Use Cases

Swing Trading - Enter on fear spikes (lime bars), exit when volatility normalizes
Counter-Trend Trading - Catch bounces during downtrends when panic peaks
Portfolio Timing - Deploy capital during high-fear periods (buy the dip strategy)
Risk Management - Reduce exposure when VIX Fix stays low for too long (complacency warning)
Options Trading - Buy options when implied volatility (and WVF) spikes

Best Practices

Combine with Support/Resistance - Lime spikes near key support levels are strongest signals
Look for Clusters - Multiple lime bars close together suggest strong capitulation
Use Higher Timeframes - Daily and weekly charts provide more reliable signals than intraday
Avoid in Strong Downtrends - WVF can stay elevated during crashes; wait for stabilization
Adjust Parameters - Tune lookback periods and percentiles for specific assets

Comparison: WVF vs VIX

Feature	CBOE VIX	Williams VIX Fix
Data Source	S&P 500 options implied volatility	Price action (high/low/close)
Assets	S&P 500 only	Any asset (stocks, crypto, forex, commodities)
Availability	Real-time data requires subscription	Calculated from free price data
Interpretation	High VIX = fear, Low VIX = complacency	Lime = fear, Gray = normal
Calculation	Complex options pricing model	Simple highest/lowest formula

Getting Started

To use the Williams VIX Fix in your own application:

// Load market data and calculate indicator
const pineTS = new PineTS(PineTS.Provider.Binance, 'BTCUSDT', 'D', 500);
const { plots, marketData } = await pineTS.run(WillVixFix);

// Initialize chart
const chart = new QFChart.QFChart(container, {
    title: 'BTC/USDT - Daily',
    height: '800px',
    layout: { mainPaneHeight: '60%', gap: 5 }
});

// Set data and add indicator
chart.setMarketData(marketData);
chart.addIndicator('Williams VIX Fix', plots, {
    isOverlay: false,
    height: 25
});

Williams VIX Fix - Daily Chart