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Last year someone asked about the formula for the
drawing of Bomar bands.Several answers came in,but,in
my opinion, none of them was really conclusive and to
the point.Since I do not possess Chris Wilkinson,s
book (that should contain the correct answer),I tried
to figure out meself what Chaikin really meant.
First,since both bands are supposed not to be at the
same distance from the MA,the data must clearly be
treated differently.
Moreover,the fact that 85% of the past data must be
contained in the bands,probably requires the use of a
1.44 STDEV.
I thus suggest the following calculation:
a.Take,over the past year, the STDEV of the
differences between all quotes greater than the MA and
that MA.
b Take ,over the past year,the STDEV of the
differences between all quotes smaller than the MA and
that MA.
c.Multiply both STDEV,s by 1.44.Add the first one to
the MA and subtract the second one from the MA.
These should ,I think,give the required Bomar bands.
Does anyone have suggestions regarding my
interpretation of the calculation?
Jacques Belgium
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