STARC Bands indicator displays Stoller's mid-range channels, called STARC-bands, on the price chart.
STARC Bands indicator is an alternative to to the standard Bollinger Bands indicator. In stable markets, STARC bands narrow and widen as volatility increases. Unlike Bollinger Bands, STARC Bands do not use closing prices and standard deviation, but use the average true range ATR to calculate, which gives more meaningful information about the level of volatility. The optimal ATR period is 10.
Application of STARC Bands indicator in trading
STARC Bands indicator readings can be interpreted in two ways.
When using STARC Bands in signal interpretationcrossing of the upper or lower band of the channel is considered as a signal to enter the market. It is recommended to open a deal when the price is fixed outside the channel, stop-loss should be placed behind the middle line of the indicator.
The second variant of interpretation of the STARC Bands indicator implies identifying oversold and overbought zonesFor this purpose, the K indicator in the indicator settings should be changed from 1.33 to 3. In this variant, testing of STARC Bands boundaries by the price is considered as the price reaching an extremum and is a signal for a possible price reversal. In this case, it is recommended to use oscillators like RSI indicator.
According to ForTrader.org experts, STARC Bands indicatorIn combination with filtering indicators, it will be effective when used in intraday strategies.