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<DIV><FONT size=2>A re-post</FONT></DIV>
<DIV><BR>Regards,<BR>Ton Maas<BR><A
href="mailto:ms-irb@xxxxxxxxxxxxxxxx";>ms-irb@xxxxxxxxxxxxxxxx</A><BR>Dismiss the
".nospam" bit (including the dot) when replying.<BR>Homepage <A
href="http://home.planet.nl/~anthmaas";>http://home.planet.nl/~anthmaas</A></DIV>
<DIV> </DIV>
<DIV> </DIV>
<DIV><A name=4>
<H3><FONT size=3>Average True Range</FONT></H3>
<P>J. Welles Wilder(known from RSI etc.)'s ATR indicator is based on his
Weighted Averaging methods and uses his True Range-indicator, eg and
is the greatest of the following differences:
<OL>
<LI>Today's high to today's low
<LI>Today's high to yesterday's close
<LI>Today's low to yesterday's close </LI></OL>
<P>The range is normally the "high - low". However, any time the value of
yesterday's close is not within the range of today's bar, rule 2) or rule 3)
applies. As with most other indicators, the periodic value is summed and
smoothed to create the final indicator. Wilder uses his "Weighted
Smoothing" techniques for his ATR. </P>
<H3><FONT size=3>Bollinger Bands</FONT></H3>
<P>Bollinger Bands plot trading bands above and below a simple moving average.
The standard deviation of closing prices for a period equal to the moving
average employed is used to determine the band width. This causes the bands to
tighten in quiet markets and loosen in volatile markets. The bands can be used
to determine overbought and oversold levels, locate reversal areas, project
targets for market moves, and determine appropriate stop levels. The bands are
used in conjunction with indicators such as RSI, MACD histogram, CCI and Rate of
Change. Divergences between Bollinger bands and other indicators show potential
action points. As a general guidline, look for buying opportunities when prices
are in the lower band, and selling opportunities when the price activity is in
the upper band.</A><A name=29> </P>
<H3><FONT size=3>Stoller STARC Bands</FONT></H3>
<P>STARC bands create a channel surrounding a simple moving average. The width
of the created channel varies with a period of the average range; thus the name
('ST' for Stoller, plus 'ARC' for Average Range Channel). STARC Bands, in a
fashion similar to Bollinger Bands, will tighten in steady markets and loosen in
volatile markets. However, rather than being based on closes, the STARC Bands
are based on the average true range(ATR), thus giving a more in depth picture of
the market volatility. While the penetration of a Bollinger Band may indicate a
continuation of a price move, the STARC Bands define upper and lower limits for
normal price action. </A></P>
<P>
<HR>
<P></P>
<P><STRONG>SMARTRADER ( TA program by Stratagem Software
International)</STRONG></P>
<DIV>In a conference held in Tokyo in spring 1990, Manning Stoller presented a
technique called STARC bands. STARC bands consist of a channel surrounding a
simple moving average. Like Bollinger bands, these bands will tighten in low
volatility markets and widen when volatility increases. In STARC bands, average
true range is used as a volatility measure.</DIV>
<DIV> </DIV>
<DIV>
<CENTER><B><IMG alt="" hspace=0 src="cid:001101bf5898$6d6d0dc0$LocalHost@xxxxx";
align=baseline border=0></B></CENTER>
<CENTER> </CENTER>
<CENTER><STRONG>FIGURE 1: SMARTRADER. </STRONG><I><A
href="http://www.traders.com/Documentation/FEEDbk_docs/Archive/0397/0397tradetips.html";>Here's
</A> the SmarTrader code for the STARC bands.</I></CENTER>
<P>The SmarTrader code is shown in Figure 1.
<BLOCKQUOTE style="MARGIN-RIGHT: 0px">
<P>Rows 9 and 10 compute the daily true range, Tr_rang and average true range
(ATR). The ATR is based on 15 days but can be adjusted as desired. Row 11 is a
simple moving average of the closing price. Row 12 is the STARC_Upper band and
is the Mov_avg plus three times the ATR. Row 13 is the STARC_Lower band and is
the Mov_avg minus three times the ATR. </P></BLOCKQUOTE>
<P>The bands are plotted as lines over the bar chart.
<P>Published in S&C's Traders Tips section - March
1997<STRONG> <BR></STRONG><A
href="http://www.traders.com/Documentation/FEEDbk_docs/Archive/0397/0397tradetips.html";>http://www.traders.com/Documentation/FEEDbk_docs/Archive/0397/0397tradetips.html</A>
<BLOCKQUOTE>
<BLOCKQUOTE><I>-- Jim Ritter, Stratagem Software International</I>
<BR><I>504 885-7353</I> <BR><I>E-mail: <A
href="mailto:Stratagem1@xxxxxxx";>Stratagem1@xxxxxxx</A></I></BLOCKQUOTE></BLOCKQUOTE></DIV>
<P align=center>
<HR>
<P></P>
<P align=center><A name="Top of page"><STRONG>Samuel</STRONG></A><STRONG> K.
Tennis</STRONG></P>
<P align=center><STRONG>STARC Bands and Sibbet's Demand Index Illustrate Your
Ability to Harness the Power of Programmable Software</STRONG></P>
<P align=center><A
href="http://www.seminarsdowjones.com/tennis.htm";>http://www.seminarsdowjones.com/tennis.htm</A></P>
<P>Sam Tennis worked as a private consultant, writing multi-user office and
financial applications, before Bill Cruz, president of Omega Research, Inc.
hired him shortly after Omega's incorporation. </P>
<P>Sam was Omega's senior programmer for about six years, actively participating
in the creation of EasyLanguage™, the development and production of SystemWriter
Plus™ and the development phases of Bridge-Telerate TradeStation™. As the
company expanded and the technical support burden grew, Sam advanced to senior
software technician and charged with training the staff of the product support
department. During his last four years with Omega, he assumed the simultaneous
responsibility of coordinator of the client training and custom programming
departments. This role involved both private and seminar-based field training of
Omega clients. Due to this unique employment history, Sam Tennis has been
acknowledged as the world's leading authority on Bridge-Telerate TradeStation's
EasyLanguage programming.</P>
<P>Today, Sam is co-owner of VISTA Research and Trading, Inc., a Florida
corporation. VISTA develops proprietary and custom programs for its clients,
translating their unique individual desires into code, principally for use on
Omega products such as Bridge-Telerate TradeStation™. VISTA'S clients include
some of the more important trading entities in the institutional field. VISTA
publishes a very comprehensive newsletter about twelve times a year which
contains information on new and existing technical analysis programs, news about
Omega Research and hints and code solutions or workarounds to programming
problems.</P>
<P><STRONG>TOPIC: </STRONG><STRONG>STARC Bands and Sibbet's Demand Index
Illustrate Your Ability to Harness the Power of Programmable
Software</STRONG></P>
<P>Sam Tennis is the leading expert on Easy Language™. </P>
<P>He wrote the original code. Using STARC Bands™ (Stoller's Average Range
Channel) and Sibbet's Demand Index for illustration, Sam will teach you how to
harness Bridge-Telerate TradeStation'sª testing ability, as well as utilize the
program's ability to notify you of signals you have specified. Although not
presently built into TradeStation, these two studies--STARC Bands and Demand
Index--are presently being used by knowledgeable technicians for analysis of
cash currencies and fixed income items. Where volume data is available, the
Demand Index can also be used on equities and futures.</P>
<P>STARC Bands are a popular and effective technique for helping traders
determine the level of risk prior to entry. They use price and volatility to
construct an indicator that never needs optimization. Most traders use STARC
Bands just as they are defined, but for those who wish to improvise, the study
represents a good programming point of departure for user modifications. Sam's
discussion of the code for STARC Bands will allow anyone with even a little
proficiency to do so. Sam will give you EasyLanguage code that can be
reprogrammed to fit any good "programmable" technical analysis software package.
</P>
<P>Sam will also describe Jim Sibbet's Demand Index and its usefulness as a
major system component to traders for whom tick and or daily volume is
available. This interesting tool is one of the few studies that uses volume and
price. It is often overlooked because it is difficult to calculate by hand. (If
done manually, the calculations would consume eighteen spreadsheet columns.)</P>
<P>All popular software packages, EasyLanguage included, share certain
conventions and techniques. Sam will show you how to identify and use the
conventions, thus simplifying the process of learning any programming language.
Sam will teach you about the most common programming problems, showing you how
to identify and correct the most common coding errors. Every computer programmer
has a set of rules and guidelines for proper testing of a module or integrated
system. Sam will share his view of this process and describe the manner in which
he feels testing should be done.</P>
<P>Finally, Sam will discuss the resources (including applicable Internet
resources) available to those wishing to start or expand their own testing
capabilities and increase their knowledge of technical analysis.</P>
<P>Note: Remember that you do not have to be a programmer to understand and use
the concepts presented in this workshop. You will benefit, no matter what
software package you are using.</P>
<P>E-mail/web site<BR>skt@xxxxxxxxx<BR><A
target=top
href="http://www.gate.net/~skt/VISTA.html";>www.gate.net/~skt/VISTA.html</A></P>
<P align=center>
<HR>
<P></P>
<P align=center><B>MAKING ORDER OUT OF CHAOS</B></P>
<P align=center>Trading Band Theory By David L. Brown </P>
<P>The concept behind the trading band theory is that a stock generally trades
within a predictable range on either side of its moving average. This provides
some degree of confidence of the direction and magnitude of its next move. The
bands are constructed by drawing lines on either side of the moving average to
encompass some percentage, say, 75%, of the stock's total movement. Where the
stock is currently trading within these bands is the key to interpreting the
direction of its next move. Interpreting trading bands, however, is more an art
than a science. I don't rely on them for buy/sell signals but rather for
confirmation of other technical indicators, such as MACD or Wilder RSI. If
several indicators are pointing toward a trend reversal, I have more confidence
in the reversal than I would from a single signal. What I'm looking for is a
"preponderance of evidence" for one side over the other. I also use trading
bands to judge the possible magnitude of a stock's move, which helps me assess
my risk. Keep in mind that trading bands are less meaningful when used with
highly volatile or low-price stocks (under $20).</P>
<P>CONSTRUCTING A TRADING BAND.</P>
<P>Short-term trading band are built usually around a 10, 21, or 30-day moving
average. Longer-term bands (using a 6, 10 or even 20-week moving average) are
used by long-term investors who want to see a stock's potential over a longer
period. The bands are generated as a percentage of the movement above and below
the moving average. I use 75% so that 75% of the movement of the stock is within
the bands. This means the upper band is 75% of the highest price above the
moving average; the lower band is 75% of the lowest price below the moving
average. This allows for clear penetrations of the upper and lower bands which
helps interpret the trend of the stock, as described below.</P>
<P>CONFIRMATION OF BUY SIGNALS.</P>
<P>I use a 14-day Wilder RSI breakout or an 8-17-9 MACD breakout to get a list
of stocks with buy signals. Then I judge the quality of these breakouts by
looking at the stock's trading bands. I use a 30-day average on a 5-month graph
because I want to see how far the stock might move over a 30-day period. In
general, if the stock has been trading in the lower band and reverses direction
without penetrating the band, I consider it a good confirmation of the breakout.
The stock will probably meet very little resistance at the 30-day moving average
and will continue its climb to the top. Option traders or short-term investors
will probably act quickly after the stock reverses its trend; long-term
investors may wait until the stock has clearly passed the 30-day line before
considering a buy. Point A on the Wells Fargo graph illustrates this kind of
trend reversal. If the stock penetrates the lower band only slightly (closing
below the band only one or two days), the confirmation is almost as good as when
it does not penetrate the band; selling pressure wasn't strong enough to keep
the stock down, and it will probably go all the way to the top. The time to be
cautious is when the stock penetrates the lower band significantly and for a
prolonged period (as Wells Fargo did early in July, at Point C). When this
happens, it will take considerable buying pressure to force the stock above the
lower band and past the 30-day line. Most likely, it will make one or more
failing attempts to pass the 30-day line, but will probably not approach the top
until it exhibits the pattern described above. Between June 19 and July 6 Wells
Fargo traded in the lower band but was unable to get past its moving average.
Then it traded outside the lower band for several days before managing to pass
the 30-day line. The buying pressure obviously was not sufficient and it plunged
through the lower band again.</P>
<P>CONFIRMATION OF SELL SIGNALS</P>
<P>To confirm a sell signal, you look for stocks trading in the upper band. If
the stock approaches the upper side of the band but does not penetrate it, I
consider it a good confirmation of a sell signal. The stock will probably fall
back to the 30-day line where it may meet some resistance and then plunge all
the way to the bottom band. However, if it penetrates the upper band
significantly or for a prolonged period, it may trade close to the band for a
while (i.e., "ride the band") before it falls toward the 30-day line. This means
there is still a lot of investor interest in the stock, and you may lose some
profits if you sell right away. Look at Point B on the Wells Fargo graph. The
stock closed above the band on June 4 and traded above the band for several
days. Then it rode the band for a few days, but failed to penetrate it again,
and then plunged through the 30-day line all the way to the bottom. The
traditional advice is to let your profits run. My advice is to watch other
indicators for sell signals. If I'm skittish about a stock that's riding the
band or if it is close to option expiration time, I'll watch a 9-3 day
stochastics and sell with its signal. If I'm more patient, I'll use a 14-5 day
stochastics. In a strong bull move (when the stock has been riding the band for
some time) I use a 12-25-9 MACD for a sell signal.</P>
<P>JUDGING RISK.</P>
<P>I also use trading bands to judge the amount of risk I'm taking and to see
how much I might expect from a stock. For example, let's say I bought Well Fargo
in early April at 71 (just after it passed its 30-day moving average). The
trading bands at that time indicated that the stock would go to the high 70's.
Since the bands move up with the price, I would extend that a bit and judge that
the stock might go to the mid-80's, which in fact it did. I suggest you study
trading bands on a variety of stock graphs, noting the ways in which they
conform to the patterns discussed above. (Good examples to start with are
Motorola, Intel, and Compaq). Once you master the art of interpreting them,
trading bands can be a reliable confirmation of other technical signals.</P>
<P>**********************************</P>
<P>Centrex-TA Terms | TradingBandsSystem | David L. Brown | Overview - Trading
Band Theory.asp</P>
<P>Centrex-TA Terms | TradingBandsSystem | David L. Brown | Techniques - Trading
Band Theory.asp</P>
<P><A
href="http://208.218.130.90/advise/chaos.html";>http://208.218.130.90/advise/chaos.html</A></P>
<P><A
href="http://www.wallstreetcity.com/help/learn/techniques/techniques_Trading_Band_Theory.asp";>http://www.wallstreetcity.com/help/learn/techniques/techniques_Trading_Band_Theory.asp</A></P>
<P>Mr. Brown is editor of Undervalued Growth Stocks, Hedged Options Trader, and
Covered Options Trader.</P>
<P align=center>©1999 <A target=_top href="http://www.telescan.com/";>Telescan,
Inc.</A> <BR><BR></P></DIV>
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