How Do You Calculate Acceleration Bands For Trading Stocks?
Acceleration bands are a popular indicator for gauging the volatility of a stock’s price action. They take into account the past action of the stock over a set time period and draw lines on either side of the stock’s price chart. These bands indicate the likely extremes the stock’s price will hit during the current price bar. As the lines are based on past price action, new behavior in a stock may break through the bands and indicate a significant change in the future of the stock over the long or short term, depending on the band’s setting. Choose the time period for the bands. This will encompass the set of bars included in the calculations. A time period of 20 will use data from the previous 20 price bars to calculate the short-term upper and lower band limits for the current bar. Longer-term trading will better perform under bands using 80 bars or more. Calculate the upper band plot point for the current bar by using the highest and lowest prices of the previous set of bars include
