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MetaStock
Formula - Bollinger
Bands
rev. 01/06/97
"Trading
bands are one of the most powerful concepts
available to the technically based investor, but
they do not, as is commonly believed, give
absolute buy and sell signals based on price
touching the bands. What they do is answer the
perennial question of whether prices are high or
low on a relative basis. Armed with this
information, an intelligent investor can make buy
and sell decisions by using indicators to confirm
price action.
But before we
begin, we need a definition of what we are dealing
with. Trading bands are lines plotted in and
around the price structure to form an
''envelope". It is the action of prices near
the edges of the envelope that we are particularly
interested in…."
Taken from Stocks
& Commodities, V. 10:2 (47-51): Using
Bollinger Bands by John Bollinger
For further
interpretation refer to the above article found in
the February 1992 issue of Technical Analysis
of Stocks and Commodities.
Bollinger Bands
are built into MetaStock™, however you may
prefer to use the individual custom formulas.
The custom
formulas for the components of the Bollinger Bands
are as follows:
Upper
Band:
mov( C,20,S ) + ( 2 * ( std( C,20 ) ) )
Lower
Band:
mov( C,20,S ) - ( 2 * ( std( C,20 ) ) )
Middle
Band:
mov( C,20,S )
%B :
( ( C+2 * std( C,20 ) - mov( C,20,S ) )
/ ( 4 * std( C,20 ) ) ) * 100
Band
width :
( ( mov( C,20,S) + ( 2 * ( std( C,20 ) )
) )- ( mov( C,20,S) - ( 2 * ( std( C,20
) ) ) ) )
/ mov( C,20,S)
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