Average True Range (ATR)

Reference resources ：https://www.thebalance.com/how-average-true-range-atr-can-improve-trading-4154923
https://school.stockcharts.com/doku.php?id=technical_indicators:average_true_range_atr

A measure of volatility . We need to pay attention to ：ATR No indication of price direction , Only provide volatility .

Calculation

Current ATR = [(Prior ATR x 13) + Current TR] / 14

  - Multiply the previous 14-day ATR by 13.
  - Add the most recent day's TR value.
  - Divide the total by 14

operation

have access to ATR To stop losses and profits .

The rule of thumb is take ATR multiply 2 To determine a reasonable stop loss point . therefore , If you buy shares , You may be below the admission price ATR Set a stop loss at twice the level . If you short a stock , You will be twice as high as the admission price ATR Set stop loss at the level of .

Intraday traders can use one minute ATR To estimate the price at 5 Minutes or 10 How much can you move in minutes .

Bollinger Bands

Reference resources ：https://www.investopedia.com/trading/using-bollinger-bands-to-gauge-trends/

Bollinger belt belongs to a mean regression strategy , It is suitable for interval fluctuation market .

Mean regression hypothesis ： If the price deviates significantly from the mean or average , Will eventually return to the mean .

Calculation

  * Middle Band = 20-day simple moving average (SMA)
  * Upper Band = 20-day SMA + (20-day standard deviation of price x 2) 
  * Lower Band = 20-day SMA - (20-day standard deviation of price x 2)

operation

When the stock price continues to hit Bollinger Band At the upper limit , The price is considered overbought ; contrary , When they continue to hit the lower limit , The price is considered oversold , Trigger a buy signal .

You can also set multiple Bollinger Bands with different thresholds . For example, use +1 SD and +2 SD To define the upward trend , use -1 SD and -2 SD To define a downward trend .

Bollinger BandWidth

Bandwidth measures the percentage difference between the upper and lower bands . The bandwidth decreases as the Bollinger band narrows , As the Bollinger belt widens . Because brin band is based on standard deviation , The decreasing bandwidth reflects the decreasing volatility , The rising bandwidth reflects the increase in volatility .

( (Upper Band - Lower Band) / Middle Band) * 100

%B

higher than 0.80 The reading of indicates that the price is close to the upper limit . lower than 0.20 The reading of indicates that the price is close to the lower limit . The surge in the upward band shows strength , But sometimes it can be explained as overbought . Falling to a lower band indicates weakness , But sometimes it can be explained as oversold . Much depends on potential trends and other indicators . although %B Itself can have some value , But it is best to use it in combination with other indicators or price analysis .

%B = (Price - Lower Band)/(Upper Band - Lower Band)

Ulcer Index

Only focus on downside risks （downside risk）. as a result of ： The index is a mutual fund （mutual funds） Designed by , The only risk for mutual funds is that the only risk is to retreat or fall .

Calculation

Percent-Drawdown = ((Close - 14-period Max Close)/14-period Max Close) x 100

Squared Average = (14-period Sum of Percent-Drawdown Squared)/14 

Ulcer Index = Square Root of Squared Average

operation

Ulcer Index Measure the depth and duration of price decline from early highs . The greater the decline in value , The longer it takes to recover to the early high , The higher the user interface . Technically speaking , It is the square root of the average of the square percentage of value decline . The penalty of square effect on large retracement is larger than that of small retracement .

Donchian Channels

Reference resources ：https://www.investopedia.com/terms/d/donchianchannels.asp

Donchian Channels Determine the comparative relationship between the current price and the trading range within the scheduled period . The three values construct a visual map of price changes over time , Similar to brin belt , Indicates how bullish and bearish the selected period is .

Calculation

operation

The top line determines the degree of bullish energy , Highlights the period through the bull bear conflict （bull-bear conflict） The highest price achieved . The centerline identifies the median or mean regression price for the period , It highlights the intermediate position achieved through the bull bear conflict in this period . The bottom line determines the degree of bearish energy , Highlights the lowest price reached during the bull bear conflict .

Compared with brin belt

Bollinger belt adopts the standard deviation of price , Therefore, it is more balanced , It can reduce the influence of maximum or minimum .

Keltner Channels

Keltner Channels Is based on the envelope of volatility , Set above and below the index moving average . This indicator is similar to brin belt , The latter uses the standard deviation to set the band .Keltner Channels Do not use standard deviation , It is Use the average true range (ATR) To set the channel distance .

Keltner Channels It is a trend tracking indicator , It is used to identify channel breakthrough and reversal of channel direction . When the trend is flat , Channels can also be used to identify overbought and oversold levels .

Calculation

Middle Line: 20-day exponential moving average 
Upper Channel Line: 20-day EMA + (2 x ATR(10))
Lower Channel Line: 20-day EMA - (2 x ATR(10))

operation

It mainly depends on the relationship between the actual price trend and the range , Pay attention to some breakthrough price trends .（ In these breakthroughs, we can add some related features）

In a stable range , It can be used to determine overbought 、 Oversold level .

And Bollinger Bands comparison

Brin belt uses standard deviation , and Keltner Channels It uses ATR .ATR It is more stable than the standard deviation . therefore Keltner Channels Have a more constant width , It is very suitable for trend tracking and trend recognition .

Trend and Momentum The difference between

Reference resources ：https://www.investopedia.com/ask/answers/121614/what-are-main-differences-between-momentum-and-trend.asp

Although they look similar at first , But there is a real difference between the concepts of momentum and trend . They are Two non competitive technologies （non-competing techniques）, The purpose is to determine in rose （upswing） Buy when And in fall （downswing） Time to sell The opportunity of , So as to support or reject each other .

How momentum plays a role in technical analysis

Momentum is leading / Forward （forward-looking）.

Momentum investment and trading rely on prices to respond to their supply and demand intensity （ At least in part ） Assumptions （assumption that prices respond (at least in part) to the strength of their supply and demand inputs）.

Momentum takes many forms . It can be based on the earnings report of listed companies 、 The relationship between buyers and sellers in the market , Even the typical speed of historical price rise and fall . In a sense , Momentum trading may contradict the fundamentals of technical analysis .

Momentum has no intrinsic quantitative properties , Therefore, most momentum based trading instruments will use formulas to allocate value to varying degrees of momentum . Many of these oscillators These values will be further plotted within a bounded range , This allows cross period comparisons between past and current momentum trends . such , Momentum has become the most common in technical analysis Leading indicators （leading indicators）.

How trends play a role in technical analysis

The trend is Lagging （backward-looking）.

Trend tracking indicators are usually less subjective and ambitious （less subjective and ambitious than momentum indicators）. If momentum is fundamental and accidental , Then the trend is the overall situation and coincidence ​​ close . Trends are not necessarily seen as causal , This may be the most basic difference between the two .

The most common form of trend analysis is the moving average index . The moving average is just a visual representation of mixing historical data together to find meaningful patterns . This is not to say that trends cannot be predicted —— But they are other indicators （ For example, momentum oscillator ） Laid the foundation （That is not to say that trends cannot be predictive – rather that they lay the groundwork for other indicators）. They are typical Lag tool （lagging tools）.