NYSE New Highs vs New LowsNYSE New Highs vs New Lows is a simple market breadth indicator that compares HIGN, the number of new highs during that day, and LOWN, the number of new lows. The new highs are on top and lows are appropriately on bottom. Without averaging, it's a little chaotic so you can smooth them out as much as you want, and the top-right label shows how much you're smoothing.
Interpretation:
Essentially, we use $SPY or $QQQ as a proxy for what's going on in the market, but because the FAANG stocks are so heavily weighted, it's not always representative. If SPY is flat/down, but there are 200 new highs today, then one of the big boys is weighing down an otherwise very bullish market. It's like looking at one of those heatmap charts, but in a single number.
Bullish Trend
- Lots of new highs
- Very few new lows
Bearish Trend
- Lots of new lows
- Very few new highs
Potential Reversal
- Too high, 250+
- Too low, 150+
High
High/Low/Open/Close Daily, Weekly, Monthly Line
I wrote this for the purpose of saving time while marking up charts by automating the process of drawing and labeling lines at areas of interest on larger
timeframes while still having the option to change the style and size of the lines and labels to adjust for any timeframe and avoid a messy chart.
I also used this as an exercise in menu organization giving users every imaginable option and producing clean readable code.
- This indicator draws a line on the Daily, Weekly, and Monthly bar at the High, Low, Open and Close of each bar as price
tends to react when revisiting these areas.
- Each set of bars has an optional identifying label with its own color set that can be shown with or without the lines
price value, and has drop down menus for size and style of each set of labels.
- Each set of lines has inputs for line/text color, line width and style, and can be hidden if the user doesn't have the need for any particular timeframe.
- Lines and Labels with delete when a new line is created.
- I recommend going into Chart Settings/Status Line and turning off indicator arguments OR moving the script to the top
of the indicator list to avoid an obstructed chart view with this indicators arguments. When Pine allows, I will update it to hide them.
Contains some public domain code from T.V. manuals and tutorial for creating drop down input menus for options.
/ ~For My Pal Jittery~
~ Who likes his clean chart and custom colors~
Lowest / Highest From WidgetRecent events inspired me to create a small widget that allows you to spot from when current value is lowest / highest.
Just add it to chart and script will compute most recent day when price was higher / lower than current and it will display:
Line coming from that value to the current one
A table with previous low/high information
Thanks to @MUQWISHI to help me coding it.
Disclaimer
Please remember that past performance may not be indicative of future results.
Due to various factors, including changing market conditions, the strategy may no longer perform as well as in historical backtesting.
This post and the script don’t provide any financial advice.
3D GATOR %HLThis indicator tracks the 3 day trading bots and measures the high and the low (%).
Usually a trend can change or continue every 3 days.
When volatility decreases and both values are the same gator is going to open its jaws so it's a good time to open a position long. Avoid shorts during low volatility.
On the other hand when volatility increases, and gator has its jaws wide open is a good time to look for shorts.
That's pretty much it.
This indicator was designed by me and created by Marketwatcher.
Scalping The Bull IndicatorName: Scalping The Bull Indicator
Category: Scalping, Trend Following, Mean Reversion.
Timeframe: 1M, 5M, 30M, 1D depending on the specific technique.
Technical Analysis: The indicator supports the operations of the trader named "Scalping The Bull" which uses price action and exponential moving averages.
Suggested usage: Altcoin showing strong trends for scalping and intra-day trades. Trigger points are used as entry and exit points and to be used to understand when a signal has more power.
It is possible to identify the following conformations:
Shimano: look at the price records of a consecutive series of closings between the EMA 60 and the EMA 223 when a certain threshold is reached. Use the trigger points as price structures to identify entry and exit zones (e.g. breakout of the yesterday high as for entry point) .
Bomb: look at the price registers a percentage variation in a single candle, greater than a threshold such as 2%, in particular on shorter timeframes and around the trigger points.
Viagra: look at there is a consecutive series of closes below the EMA 10.
Downward fake: look when, after a cross under (Death Cross), the price returns above the EMA 223 using the yesterday high as a trigger point.
Emergence: look at the EMA 60 is about to cross over the EMA 223.
Anti-crossing: look at, after an important price rise and a subsequent retracement, the EMA 60 is about to cross under the EMA 223 but a bullish impulse brings the price back above the EMAs.
For Sales: look at two types of situations: 1) when the price falls by more than 10% from the opening price and around the yesterday’s low or 2) when the price falls and then reaches, in the last 5 days, a bigger percentage and then breaks a trigger point.
Colour change: look at the opening price of the session - indicated as a trigger point.
Third touch of EMA 60: look for 3 touches below the EMA 60, and enter when there is a close above the EMA 60.
Third touch of EMA 223: look for 3 touches when there are 3 touches below the EMA 223, and enter when there is a close above the EMA 60.
Bud: look at price when it crosses upwards the average 10 and subsequently at least 2 "rest" candles are between the maximum and minimum of the breaking candle.
Fake on EMA 10: look for the open of a candle higher than the EMA 10, the minimum of the candle lower and the closing price returns above the EMA 10..
For Stop Loss and Profit Targets consider a proper R/R depending on Risk Management, using price structures such as the low of the entering candle and a quick Position Management moving quickly the Stop-Loss at Break-Even.
Configuration:
Market
EMA: The indicator automatically configure itself on market it knows (Binance, Piazza Affari and NASDAQ) otherwise it can be configured manually fo Crypto market (5/10/60/223) or Stock Market (5/10/50/200).
Additional Average: You can display an additional average, e.g. 20-period average.
Chart elements:
Session Separators: indicates the beginning of the current session (in blue)
Background: signals with the background in green an uptrend situation ( 60 > 223) and in red background a downtrend situation (60 < 223).
Trigger points:
Today's highs and lows: draw on the chart the opening price of the daily candle and the highs and lows of the day (high in purple, low in red and open in green)
Yesterday's highs and lows: draw on the chart the opening price of the daily candle, the highs and lows of the previous day (high in yellow, low in red).
Credits
Massimo : for refactoring and suggestions.
HTF Liquidity Levels█ OVERVIEW
The indicator introduces a new representation of the previous days, weeks, and months highs & lows ( DWM HL ) with a focus on untapped levels.
█ CONCEPTS
Untapped Levels
It is popularly known that the liquidity is located behind swing points or beyond higher time frames highs/lows (in a sense, an intraday swing point is a day high/low). These key areas are said "liquid" because of the accumulation of resting orders, mainly in the form of stop-loss orders. And this more significantly on higher time frames which have more time for stacking orders. As the result, the indicator aims to keep track of untapped levels that have their liquidity states intact.
Liquidity Pools
Once a liquidity level identified, or better, a cluster of liquidity levels work as magnets for the market. The price is more likely to make its way towards heavier pockets of liquidity, by proximity (the closest liquidity pool), and by difficulty (path with less obstacles). This phenomenon is referred as liquidity run, raid, purge, grab, hunt, sweep, you name it. Consequently, the indicator can help you frame a directional bias during your trading session.
█ NOTES
Drawings
Once a level is tapped, it is highlighted. At the end of each day, all tapped levels are cleared.
Percent Off All-time High (% Off High)Percent Off All-time High tracks the percentage difference between the previous day’s closing price and the All-Time high price of the security’s entire price history.
This metric tells you how far the price has deviated from/converged on the all-time high price.
4C Daily Levels Suite + Premarket High/LowThis '4C Daily Levels Suite + Premarket High/Low' indicator is a clean way to automatically plot important daily levels including:
Prior Day High
Prior Day Low
Prior Day Close
50% level between Prior High/Low
Today's Open
Today's Premarket Low+High
This Daily Levels indicator is unique in its ability to:
-Plot all of the daily level PLUS premarket high/low levels (extended hours must be turned ON)
-Can hide past days levels, only plotting levels on the current day, to keep chart cleaner
-Can extend line levels right or fullscreen
-Plots the level price at each level on the chart
-Can show/hide price levels labels
-Can add supplemental premarket levels plot to show levels being formed during the premarket time period
-Coded with line.new vs plot so dashed lines are available as a style
-Automatically hides the indicator if the timeframe selected is Daily or greater
SEE SCREENSHOT EXAMPLES BELOW
Default mode, with extended hours showing:
With supplemental premarket plot showing:
Default mode without extended hours showing:
Showing past day’s levels
Extend lines to fullscreen
Some parts of this code were adapted from 'pd Levels' by CryptoCurl
HLC True Strength Indicator (with Vix)HLC True Strength Indicator Volume Weighted with Vix Line by SpreadEagle71
This indicator is a True Strength Indicator with Close, High and Low used together, along with the TSI of the Vix.
The white line is the close. The red line is the lows and the blue is the highs. These are also volume-weighted.
How to Interpret:
1. zero line crosses. If SPY/SPX500 crosses the zero line, then its bullish. If the purple Vix line crosses up, watch out because this is bearish.
2. white/blue/red lines cross purple (Vix). If they cross upwards, this is bullish. If downward, this is bearish. Basically, SPX, ES1!, SPY or even DIA can be used. The security and the Vix should travel in opposite directions and cross the zero-line at the same time. But this is not always the case.
3. Black area infills. These are used between the close and the highs (blue) and the lows(red). Close should not be between these in order to have momentum.
4. Close (white line) leads. Close is the last price so it tends to show where the others (highs and lows) are going. If the close is sagging below a high where the blue lines are on top, this could mean that there is a reversal coming. Same holds true for a white line above a "valley" formed by the blue and red lines; it could mean a reversal to the upside soon.
5. The Black Infill areas as a squeeze or contraction/expansion area. The thinner the black infill areas, the more of a momentum "squeeze" could be present. Wide black infill areas mean increased volatility and what may come next is a reversion to the mean for volatility. See TTM Squeeze Indicator or the Squeeze Momentum Indicator (kudos LazyBear).
Lastly, just remember indicators indicate; they are not magic. :)
SpreadEagle71
High Frequency Day Trading IndicatorMentioned Indicator uses RSI, Stoch RSI, SMA, EMA, SMMA, Double EMA to check for quick buying and selling areas for Day Trading.
For utilizing the tool, you'll need to wait for a Possible Trend Reversal (Represented by Triangle) and a confirmation to go Long by using a combination of Moving Averages which are then represented by circular dots on chart upon Bar Closure.
For Stop Loss once can simply place a Stop below/above the last Low/High respectively.
This trading Indicator is only recommended for high frequency trading on smaller time frames if you're using a highly volatile Coin/Asset Class.
Disclaimer: Please use this indicator in Test Environment to get a hold of concepts of this indicator. We do not advise using 100% capital for each order, as a matter of fact, we only recommend a risk of upto 1% on each position so Risk to Reward is maintained in proper sense. Please use Stops with all indicators and do not ever use an indicator without stop losses to save your capital.
NOTE: Indicator can be developed further to be used Trading Bots such as 3commas, Autoview, Wunderbit Bot, and Trailing Crypto Bots. For configuration of Automation Bots, you can contact us here on tradingview itself! :)
Wurucututu's Daily/Weekly/Monthly HLOCThis script draws the High/Low range for a daily, weekly, or monthly periods. By default is set to weekly.
Also it draws the open and close for each period, painting it in red if open greater than close, and green otherwise.
You can forward shift ranges to see how current price action interacts with ranges from past periods. By default this is set to zero.
For instance, here is the interaction of current week with previous week range (i.e. a 1 week shift forward).
And here is a 7 month shift forward.
[TTI] Stage 2 Signal & NetNewHighs vs NetNewLowsHISTORY AND CREDITS –––––––––––––––––––––––––––––––––––––––––––––––––––––––
Stage 2 is part of Mark Minervini's NON-NEGOTIABLE criteria. What does this mean? Well it means that Mark does not enter a trade that is not in Stage 2. Stage analysis is the work of Stan Weinstein who divides stock price movements in 4 stages (Stage1, Stage2, Stage3 and Stage4). Additionally, the second part of the indicator, NetNewHighs (NNH) vs NetNewLows (NNL), has been used by many traders, most recently I have seen Matt Caruso use it in his methodology.
WHAT IT DOES ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
1️⃣ Stage 2 Signal
This method uses price, moving averages, volume in order to asses when it is the best time to get in a trade.
👉 Stage 1 - stock goes sideways and does not make any price progress
👉 Stage 2 - stock gains a lot of value and is trending up. It shows strong support from institutions
👉 Stage 3 - stock goes in a sideways action again
👉 Stage 4 - stock loses a lot of it gain in a short amount of time
Stage 2 is shown by the AQUA/CYAN color on the first line of the indicator.🟦
2️⃣ Net New Highs vs Net New Lows
This assess the general market health. It looks at the ration of New Highs vs New Lows. The indicator assess when there has been 3 consecutive days of Net New Highs > Net New Lows, this show that the general market is moving up as more stocks are advancing than those that are declining. As per Investor Business Daily research the stocks move is determined 50% by the move of the general market, 25% by the move of the sector it is in and 25% by the stock itself. Therefore, the indicator helps assess and analyze the 50% of the general marekt.
When the condition of 3consecutive days is met the indicator prints green square on the bottom line 🟩.. The sensitivity (i.e. the 3 day can be changed in the settings).
HOW TO USE IT –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
1️⃣ Stage 2 Signal
Only enter trades when they are in a Stage 2. This drastically increases the probability of success when trading to the long side. Look for AQUA/CYAN squares print before entering a trade
2️⃣ Net New Highs vs Net New Lows
Look for confirmation criteria indicated by a printing of green squares in the bottom of the indicator.
ORB-PreDay_PerM_LevelsThis script provides following levels:
1. ORB Level - You can adjust the timeframe of Opening Range (plots from 9am to 4pm)
2. ORB Fib Extension - 1.618 and 2.618 Fibonacci Extension of ORB High and Low (plots from 9am to 4pm)
3. Previous Day High/Low/Close - You can adjust color/thickness of the lines (plots from two days ago so that you can clearly see the levels)
4. Previous Two Days High/Low (plots from two days ago so that you can clearly see the levels)
5. Pre-Market High/Low (plots from 6:30am to 11am)
All in one indicator gives much better clarity of where current instrument is trading in relation to ORB, Previous Day Levels and Previous Two Days Levels along with Pre Market Levels.
You could combine these levels with your favorite EMA or EMA Cloud to create a trading system.
You could combine these levels with MA Cloud and ATR vs DTR script to gauge the move.
Look at the TWTR Chart today and see how these levels are respected.
High-pass filterHigh-pass filter | Pine Utilities series, ready to be used in "study-on-study" fashion |
Represents the difference between the filter and the original unfiltered data.
How to use:
1) Add a filter to your chart (in this particular case it was 4-pole Gaussian filter implemented by @everget, ty man);
2) Tap ... on your's filter status line and choose "Add study/strategy on ...", then choose High-pass filter. Alternatively, add high-pass filter directly to your chart, then High-pass filter's settings -> Basis -> choose the filter you've applied during the step 1;
3) Choose the source (op2 and hlcc4 are available as well);
4) See the difference (literally).
Peace TV
[TTI] All-time-high (ATH), (ATL), 52 week high and low Dots––––History & Credit
I wanted to show our community the idea that stocks that make All Time High are likely to continue making ATHs for some time. It goes contrary to the idea "buy cheap sell high". Actually, in the real market leaders the stocks that make 100+% return are just getting started on returns to few THOUSAND percent. I have used code from QuantNovad scrip in this one too. So thanks to him as well, since it speeded writing it from scratch!
–––––What it does
The script paints dots and shows stats.
The dots are 4 types:
🟢 = Every time a new ATH is achieved, a green dot paints above the bar
🟣 = Every time a new 52week High is achieved, a purple dot paints above the bar
🟡 = Every time a new ATL is achieved, a yellow dot paints below the bar
🟠 = Every time a new 52week Low is achieved, a orange dot paints below the bar
Stats =
Show in a box in the bottom right corner of the screen. How many times has this stock achieved:
👉 ATHs
👉 52WK High
👉 ATLs
👉 52WK LOW
–––––How to use it
This is really an illustrative script to get the idea of the methodology "buy high sell higher', that we teach as momentum traders.
Some notable examples to check are:
HOOD
MSFT
TSLA
AAPL
See the stock dynamics and understand that bottom fishing doesn't result in stocks making massive moves.
Hi-Lo Trend BarsI present to you a simple but useful indicator.
The basic logic is an indicator that tracks the high of the high bars in the specified range and the low of the low bars in the specified range.
I used two multipliers in order to go out of certain ranges and I tried to provide precision by subtracting this multiplier value from the lowest and highest values.
I set the steps of the multipliers to 0.01 so that it is easy to use on instruments that require finer tuning.
Because every instrument has its own dynamics. You should change the multiplier values according to the instrument dynamics.
For example, under Spot, these multiplier values work efficiently with a large multiplier such as 2.0. It is more efficient in the range of 0.1 - 0.2 in the stock market.
I hope your transactions will be of some use in directional evaluation.
Thanks.
marketsangle ohlc finderThis Indicator helps you to identify open=low, open=high, close=low and close=high candles. You can use it anytime frame you want.
open=low => Shows Strong Buying Force
open=high => Shows Strong Selling Force
close=low => Shows Strong Selling Force
close=high => Shows Strong Buying Force
For best results use it with a combination of other indicators or oscillators.
TL Data PanelIntroducing the TraderLion Data Panel
Features
1. Plot Quarterly EPS & Sales in a table. Disclaimer | TradingView data for EPS & Sales can be highly inaccurate in some cases.
2. U/D Ratio - Calculates the Up/Down Volume Ratio on a 50 Day Average or 20 Day Average. A number above 1.5 will show in green.
3. DCR - Calculates the Daily Closing Range for the stock. It's green when the DCR is greater than your benchmark (set in indicator settings) and greater than 50%.
4. WCR - Calculates the Weekly Closing Range for the stock. It's green when the DCR is greater than your benchmark (set in indicator settings) and greater than 50%.
5. Extended - Calculates if the stock is extended vs the 10DMA and 10WMA. The output will be Yes or No.
6. RSNHBP Count - Counts the number of RSNHBP in the past 30 sessions. Higher the count the better the odds of a stock performing well in the markets.
7. HV Stats - This shows if a stock meets the HVE/HV1/HVIPO criteria. HVE - Highest Volume Ever. HV1 - Highest Volume in One Year. HVIPO - Highest Volume Since IPO.
Customizations
Up Down Volume Length - Toggle between 50 Day or 20 Day.
Average $ Volume Length - Toggle between 50 Day or 20 Day.
Closing Range Benchmark - Set your benchmark vs any index.
RS Benchmark - Calculate RSNHBP benchmark vs any index.
Table Size - Tweak table size on personal preference.
Table Position - Tweak table position to top right, bottom left, bottom right, or top left.
Margins vs ROE - Toggle this setting to display Margins or ROE.
Color Theme - Toggle between Light or Dark Theme.
If you have any questions, please post them in the comments below!
Buy / Sell indicator light version [Crypto_BCT]The indicator is based on the search for the lowest bars in a given period (can be customized).
You can add a search for the highest bars to determine the closed order points.
You can add a filter by the value of the RSI (you can customized it separately for buying and selling).
Alerts for buying and selling are set.
It can be used to work with bots, for example 3COMMAS DCA bot.
--------------------------
Signal Condition Settings:
(Buy) Lowest Bar
The closing of the current bar is lower than the closing of the bars back in this range
(Buy) RSI value <
The RSI index is below this value
(Sell) Highest Bar
The closing of the current bar is higher than the closing of bars in this range
(Sell) RSI value >
The RSI index is higher than this value
Koalafied EdgesIndicator based on user selected periods 'edges' (highs/lows). Includes One-Time-Framing and sweeps of levels.
User selection of previous Session/Day/Week highs and lows. These will plot over the relevant period once it has completed. Intra-day there are three periods that can be plotted.
For now these are most relevant to crypto. It can be useful to think of previous levels being locations that are likely to contain liquidity that the market might sweep in the future,
as much like pivot points, traders stop orders can be found there. Session breaks are included to allow for clear delineation between user selected periods. Additionally the option
to colour the background of a specific period is given to the user, this can be useful as an aid for visual analysis of session behaviour over time.
Untapped Levels
Previous Levels (Highs/Lows) that price has not re-tested will remain on the chart. These are typically the levels that are swept for liquidity in future periods.
Sweeps
Sweeps are formed when a candle opens above/below a previous periods level, crosses it and closes back on the side of the open. Often can mark important
pivots in the market and potential reversals. Useful if you think of stop liquidity resting outside previous periods highs/lows. Market 'sweeps' the level,
taking liquidity and reverses. Alerts for these are included.
One-Time-Framing
Indicator shows One-Time-Framing (OTF) for user selection of Candle, Session, Day, and Weekly timeframes. The background between the periods highs and lows (or candle colour)
will display the OTF state. This is a Market Profile concept that isn't typically found in Tradingview Scripts.
OTF is a sequence of days or time period where you don’t get a break of the previous candles low (OTF Up) or high (OTF Down). Typically shows a market
that is trending in one direction. If it's an outside day then no OTF status, if it's an inside day then the previous period high or low hasn't been
breached so OTF status stays same.
Candle colouring. I've included the option to switch between OTF coloured candles or my Volume Extension candles. I find the Volume Extension Candles invaluable
in showing areas of high market participation and can be quite informative at significant levels often showing exhaustion at support/resistance or market strength on breakouts.
Candles not supported by rising volume are coloured black while those that are retain their colouring.
Important to note that this indicator plots prior levels only when the selected period has ended. So at the start of a new period, the high/low of the previous
period will be plotted, with untapped lines extended into the future. The indicator is designed to show you what 'has' happened and to provide areas
of interest where you may wish to initiate trades. The sweep signals are the only real-time plots.
HL Marker - CKThis Indicator will help to identify the high and low on the trend, which helps to draw the trendline perfectly.
Percentage Levels by TimeframePlots the positive and negative percentage levels from a selection of timeframes and sources for any ticker. You can use this within a pullback trading system. For example, if you historically look at the average pullback of large cap stocks and ETF's, you can use this indicator to plot the levels it could pullback to for an entry to go long. It can be used as potential targets when trading a ticker short. Another use for this is to backtest the set percentage targets using TradingView's bar replay feature to see how ETF's and large cap stocks have reacted at these levels. Note: This is intended to be used at timeframes equal to higher than the chart's as it may cause re-painting issues.
Currently percentage levels are statically set to 1, 3, 5, 10, 15, 20, 25, and 30% levels above and below the chosen source (open, high, low, close). You can also display the data based on timeframes from Daily (1D) all the way up to Yearly (12M)
*Not financial advice but in my opinion the current percentage levels set (see above) are best used for ETF's and Large Cap Stocks.
Jan 2
Release Notes: Added the ability to select the historical bars to look back when plotting levels
Jan 2
Release Notes: To get a better display or proper resolution on your charts, change the view settings to "Scale Price Chart Only"
Jan 2
Release Notes: To add % labels for this indicator on the price axis, change your chart settings to include "Indicator Name Label" & "Indicator Last Value". You can find this under the Label section after hitting the gear icon in the bottom right of your chart.
Jan 2
Release Notes: Added: Custom Line Plot Extension Settings. Ideally both values should be equal to display optimal extended lines. To return to a base setting: '1' = Historical Lookback & '0' = Offset Lines. Also note this is dependent on the timeframe you are viewing on the chart.
Jan 2
Release Notes: Removed indicator from example chart that was not needed.
Jan 2
Release Notes: Updated some comments in the Pine Script
Jan 2
Release Notes: Update: Added commentary and instructions in the indicator settings to address recommended line plot settings for Stocks/ETF's vs Futures
Jan 2
Release Notes: Changed title from "Calculation Method" to "Calculation Source"
Jan 4 2021
Normal use of security() dictates that it only be used at timeframes equal to or higher than the chart's as it may cause re-painting
K's Volatility BandsVolatility bands come in all shapes and forms contrary to what is believed. Bollinger bands remain the principal indicator in the volatility bands family. K's Volatility bands is an attempt at optimizing the original bands. Below is the method of calculation:
* We must first start by calculating a rolling measure based on the average between the highest high and the lowest low in the last specified lookback window. This will give us a type of moving average that tracks the market price. The specificity here is that when the market does not make higher highs nor lower lows, the line will be flat. A flat line can also be thought of as a magnet of the price as the ranging property could hint to a further sideways movement.
* The K’s volatility bands assume the worst with volatility and thus will take the maximum volatility for a given lookback period. Unlike the Bollinger bands which will take the latest volatility calculation every single step of time, K’s volatility bands will suppose that we must be protected by the maximum of volatility for that period which will give us from time to time stable support and resistance levels.
Therefore, the difference between the Bollinger bands and K's volatility bands are as follows:
* Bollinger Bands' formula calculates a simple moving average on the closing prices while K's volatility bands' formula calculates the average of the highest highs and the lowest lows.
* Bollinger Bands' formula calculates a simple standard deviation on the closing prices while K's volatility bands' formula calculates the highest standard deviation for the lookback period.
Applying the bands is similar to applying any other volatility bands. We can list the typical strategies below:
* The range play strategy : This is the usual reversal strategy where we buy whenever the price hits the lower band and sell short whenever it hits the upper band.
* The band re-entry strategy : This strategy awaits the confirmation that the price has recognized the band and has shaped a reaction around it and has reintegrated the whole envelope. It may be slightly lagging in nature but it may filter out bad trades.
* Following the trend strategy : This is a controversial strategy that is the opposite of the first one. It assumes that whenever the upper band is surpassed, a buy signal is generated and whenever the lower band is broken, a sell signal is generated.
* Combination with other indicators : The bands can be combined with other technical indicators such as the RSI in order to have more confirmation. This is however no guarantee that the signals will improve in quality.
* Specific strategy on K’s volatility bands : This one is similar to the first range play strategy but it adds the extra filter where the trade has a higher conviction if the median line is flat. The reason for this is that a flat line means that no higher highs nor lower lows have been made and therefore, we may be in a sideways market which is a fertile ground for mean-reversion strategies.
