Description

• A Band Percentage is defined based on which two lines- upper and lower- are plotted enveloping the average line
• For example, if you enter band percentage as 1%, then at each bar value 1% will be added and deducted and subsequently, all points shall be plotted as upper and lower lines respectively
• This indicator does not consider any other parameter
• A Shift can also be applied to the lines. For a Shift value of (+1), data of previous day will be plotted as current day’s value in the two enveloping lines

Interpretation

• If stock is quite, the bands contract and tells that breakout is expected
• Since bands are based on average price +- percent, it can give good breakouts when price movements are fast and trending

Default Parameters Used/Inputs

• Close Line
• Average Type
• Bars- number of bars for average calculation
• Shift- Number of bars by which data should be shifted while plotting enveloping lines
• Band Percent: Percentage by which Average Line values will be added and subtracted to give as inputs for the enveloping lines

Returns/Output

Upper and Lower Bands of Average Line

Formula

Upper Band = Moving Average * ( 1 + percent)
Lower Band = Moving Average - factor * Standard Deviation (SD)
Factor – It is the absolute number E.g. 1,2,3 etc