Hi Siddhartha, there are a lot of volatility-based indicators out there that are good. What matters more is the level of expertise one has with an indicator. The more you understand an indicator, the more useful it will turn out to be and help you when making trading decisions.

The simplest way to gauge volatility when trading a breakout is to pay close attention to how the candlestick and volume structure in the region around the breakout is unfolding. A price breakout that is accompanied by an increase in the size of the candle indicates at volatility expansion. If this is also accompanied by an expansion in volume, it enhances the validity of the breakout.

Meanwhile, price-based indicators can also be used to gauge volatility. Some of the indicators that you could consider exploring are:

Bollinger Bands: Plotted in the form of two standard deviation bands above and below a central moving average line, this is a classic volatility-based indicator. An expanding bands mean volatility is expanding, and vice versa. Keep an eye when the bands have narrowed significantly and have become sideways. This could be followed by a nice volatility expansion.
ATR: An excellent measure of volatility. The beauty of this indicator is that it can be directly used to place stop losses across time frames and across securities. For instance, as at the time of writing, the hourly ATR of Nifty is 88. If you are trading based on the hourly time frame, you could place a stop loss of 88points (1x) or in some multiple thereof, such as 2x, 3x etc. depending on your risk tolerance. A rising ATR line tells expanding volatility and hence calls for a wider stop loss, and vice versa.
ADX: A versatile indicator that tells about whether the security is trending or ranging as well as the strength of the trend. It is an oscillator that fluctuates between 0 and 100. A reading below 20 indicates the prevailing trend is quite weak. When ADX spends quite some time below 20, it is worth keeping an eye on the price action for a potential volatility expansion.
Williams Alligator: Although not a volatility-based indicator, it does provide hints about volatility. It comprises of 3 moving average lines called Lips, Teeth, and Jaws. When the 3 lines are sideways and crossing back and forth of each other (meaning the Alligator is sleeping), it tells that the price is undergoing a consolidation. Such dormant periods are usually followed by an expansion in volatility and hence, must be closely monitored.

The list could go on, but you could check the aforesaid indicators to gauge volatility.

In School of Stocks (click here to visit), we will soon be coming out with a new module called Trading Strategies, wherein we shall also explain about Volatility-based trading strategies Stay tuned for more updates in this space!

Which Indicator is the best measure of volatility?