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.
FIGURE 1: SMARTRADER. Here's the SmarTrader code for the STARC bands. The SmarTrader code is shown in Figure 1. 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.
The bands are plotted as lines over the bar chart.
-- Jim Ritter, Stratagem Software International
504 885-7353
E-mail: Stratagem1@aol.com
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