Bands, envelopes and channels used in trading and investing.

In his book Bollinger on Bollinger Bands published in 2001 John Bollinger starts chapter 6 “History” with the following statement. “The history og trading bands, envelopes, channels etc., is long and interesting”.

The chapter is interesting and a must read for those interested in trading bands. Among others, he mentions Bomar Bands, asymmetric trading bands, that contained 85 % of the price action over the past year where the middle of the band was a 21 day moving average. Bomar Bands are the bands that to my knowledge is most similar to my own percentilebands.

But in stead of a moving average as the middle of the band, I use a moving median (see the formulae in the Excel spread sheet). I find that more natural for percentile bands, that I compute for the 2.5%, 5%, 10 % and any other percentile.

Moving average envelopes are perhaps the simplest envelope you can think of, but there are a lot of similar indicators, for example

  • Price Channel
  • Average True Range Bands
  • High Low Bands
  • Bollinger Bands
  • Percentile Bands
  • Fractal Chaos Bands
  • Acceleration Bands
  • Donchian Channel
  • Keltner Channel
  • STARC Bands
  • Prime Number Bands
  • Valuation envelopes

Since there are a large number of ways to generate these bands, envelopes and channels, you may find others. If you don’t know the indicator search on the internet, on a video sharing plattform or ask one of the many AI driven digital assistants. One of our favourite indicators are Williams Fractal Chaos bands that is explained here. The reason is that these bands filter out noise and are often combined seamless with Williams Alligator indicator.

Of course, if you are a seasoned trader or investor and know the financial instrument that you invest in or trade, you may have found your own favourite indicators. Technical analysis is about probabilities, and finding an edge.

For additional information see this article on my site with identical title.