Trading Bands

There are three different trading bands to display. These Trading Bands work in conjunction with the Moving Average Indicator.

The trading band consists of the point of maximum and minimum divergence from the trend represented by the moving average. The default percentage is 10 percent of the moving average. You may need to change this variable to accommodate the price movement of the different equities.

What you want to do here is come up with an envelope that will contain the price movement of the equity being studied. This envelope should present possible entry and exit points for individual issues. The price reaching the top of the envelope would be an indication to sell or go short an equity. Conversely, the price reaching the bottom of the trading band would be an indication to buy or go long the equity. It should be noted here that using the trading bands with a centered moving average will provide you with a more accurate envelope to contain price action.