Absolute Bands 外汇EA

Principles of construction of the
indicator.

              The Absolute Bands (AB) indicator is
reminiscent of the Bollinger Bands indicator with its appearance
and functions, but only more effective for trading due to the significantly
smaller number of false signals issued to them. This effectiveness of the Absolute
Bands indicator is due to its robust nature.

              In the Bollinger Bands indicator, on
both sides of the moving average – Ma, there are lines spaced from Ma by the
standard deviations  Std=Sqrt(<(X-
Ma)^2>)  (where X is the price
history, <…> is the averaging procedure for a given number of bars)
multiplied by the number (2.0 by default). In mathematics, it is proved that an
estimate that provides a minimum of the standard deviation is a mathematical
expectation, i.e. the moving average on which the Bollinger Bands
indicator is based. Therefore, the Bollinger Bands contain all
points of the price history in a concentrated manner.

              The Absolute Bands indicator is
based on the Median = (Max + Min) / 2 moving median line. On both sides
of the Median, there are lines spaced from it by moving averages
absolute deviations <| X- Median |>  multiplied by a number (1.5 by default). At the same time, it is
the median that minimizes mean absolute deviations, which is used by the Absolute
Bands indicator. Mean absolute deviations are less sensitive to the
often purely random price spikes that occur on the market, which makes the Absolute
Bands indicator more robust or less responsive to such emissions. While
random price surges lead to the classic Bollinger Bands indicator
giving false signals.

Absolute Bands indicator readings and trading with it.

1. A trend
   occurs after a period of price consolidation, which is expressed by the Absolute
   Bands indicator in horizontal middle line and the convergence of the
   upper and lower lines. If after the consolidation period (1.1) the upper and
   lower lines diverged, (1.2) the price rose above the upper line (or dropped
   below the lower line), and (1.3) the middle line went up (down) sharply, then
   this indicates the beginning of the trend and you need to open position on Buy
   (Sell).

2. If the
   price moves from the top line down (from the bottom line up), and the middle
   line is horizontal, this indicates the origin of the channel (the price most
   likely reaches the opposite border) and you need to open positions on Sell
   (Buy).

3. If peaks
   and valleys outside the boundaries of the Absolute Bands
   indicator band are followed by peaks and valleys within its band, then a
   previously established tendency (trend, channel) may end.

All these situations are shown in the screenshots.

Indicator settings.

• Price type  – applied price.
  Values: Close price, Open price, High price, Low price, Median price  ((high + low)/2  – default), Typical
  price ((high + low + close)/3),    Weighted  price  ((high + low
  + 2*close)/4). 
• The
  averaging period    – 
  averaging period. Any integer  (20 by default).
• Channel width factor – channel width factor. Values: any real number (1.5 by default).