Presently I am working on KELTNER channels.Keltner channel uses ATR (Average True Range)
instead of Standard Deviation used in Bollinger Band.But differs in 2 aspects.
1.Keltner bands are narrower than Bollinger Band.This is because ATR is less volatile than
Standard Deviation.
2.Keltner channel uses Exponential Average which is more sensative than simple average used
in Bollinger Band.( In Bollinger bands also Exponential average can be used.
A good rule of thumb is the longer the length of the exponential moving average, the greater the
lag on the indicator. Lastly, the higher the multiplier, the greater the width of the Keltner Channel.
When GREEN candles are sandwiched between TOP band of BB & Keltner,then UPWARD movement is intact.
Similarly if RED candles are sandwiched between LOWER band of BB & Keltner then it indicates a DOWNWARD movement.
Bollinger Bands scores over Keltner bands in range bound markets , because it will a better job of
filtering out the noise.
Exhuastive examples with explanation are found here:
http://tradingsim.com/blog/keltner-channels-versus-bollinger-bands/
4 Years back ,a senior boarder "rkkarnani" shared a PM with me ,regaring STARC bands. STARC bands
are almost similar ( or identical ???) to KELTNER channel.At that time I was working on Bollinger Bands.
Here is the difference between these two ,in single graph.
Zerodha provides these charts in their "PI" platform. (STRAC bands also)
Courtesy: chartschool.com & tradingsim.com
instead of Standard Deviation used in Bollinger Band.But differs in 2 aspects.
1.Keltner bands are narrower than Bollinger Band.This is because ATR is less volatile than
Standard Deviation.
2.Keltner channel uses Exponential Average which is more sensative than simple average used
in Bollinger Band.( In Bollinger bands also Exponential average can be used.
A good rule of thumb is the longer the length of the exponential moving average, the greater the
lag on the indicator. Lastly, the higher the multiplier, the greater the width of the Keltner Channel.
When GREEN candles are sandwiched between TOP band of BB & Keltner,then UPWARD movement is intact.
Similarly if RED candles are sandwiched between LOWER band of BB & Keltner then it indicates a DOWNWARD movement.
Bollinger Bands scores over Keltner bands in range bound markets , because it will a better job of
filtering out the noise.
Exhuastive examples with explanation are found here:
http://tradingsim.com/blog/keltner-channels-versus-bollinger-bands/
4 Years back ,a senior boarder "rkkarnani" shared a PM with me ,regaring STARC bands. STARC bands
are almost similar ( or identical ???) to KELTNER channel.At that time I was working on Bollinger Bands.
Here is the difference between these two ,in single graph.
Zerodha provides these charts in their "PI" platform. (STRAC bands also)
Courtesy: chartschool.com & tradingsim.com
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