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Miscellaneous > SEB Std Error %A

Article/Author: "Standard Error Bands" Jon Anderson, Stocks&Commodities Magazine, Traders Tips, 09/1996

Download: SEB_PCNT_A.ELA

File Includes:

Indicator - SEB Std Error %A
Function - PercentA

Category: Miscellaneous > SEB Std Error %A

Description:

%A is an oscillator which shows where the price is in relation to the standard error bands.

If the security's closing price closed at the upper band, %A would be 100. Likewise, if the security closed at the lower band, the indicator level would be zero. If the price closed above the upper band or below the lower band, the values would exceed 100 or drop below zero.

This indicator is calculated according to this formula:

%A = (Close - Lower SmoothedStdError)/(Upper SmoothedStdError - Lower SmoothedStdError) x 100%, where:


Upper SmoothedStdError = SmoothedRegressionLine (EndPointOfRegression of Close Price,SDeg) + 2 x SmoothedStdError
Lower SmoothedStdError = SmoothedRegressionLine (EndPointOfRegression of Close Price,SDeg) - 2 x SmoothedStdError

Please, read the article to learn more

Usage:

This indicator should be used together with LinRegSlope and R-squared indicators and Bollinger bands.

First of all, locate areas of low volatility indicated by tight Bollinger bands. Once these areas have been determined, find areas where the R-squared is in the lower 15th percentile and turning upward. This indicates areas of exhausted consolidation. Next, look for the standard error bands to turn upward with the price heading toward the upper band. This can be easily seen by gauging the %A indicator and the regression slope. Also, note the overall trend of the %A indicator. When this indicator rises gradually toward the level of 1 instead of abruptly, it is often a leading indication of trend direction, and serves as confirmation to the overall signal.

Short signals are determined in the same manner. Look for the Bollinger bands to be tight, and for the R-squared to be in the lower 15th percentile turning upward. Next, look for the standard error bands to be turning downward with the price moving toward the lower band. This can easily be seen with the %A and the regression slopes. In addition, as with the buy signal, look to see the standard error bands tighten as the trend moves downward.




Inputs:

Lenght - number of bars used in LinRegValue calculation
SDeg - number of bars used in smoothed StdError calculation

EasyLanguage Code:
INPUTS: LENGTH(21), SDEG(3);


PLOT1(PERCENTA(LENGTH, SDEG), "%A");
PLOT2(0, "ZEROLINE");