A Percentage-Based Adaptive Trend Band Indicator

Summary

The document presents a price-following indicator built from a percentage envelope around the close. A recursive reference line, initialized at the first close, is constrained by the upper and lower bounds of that envelope: it rises when the lower bound is above the prior reference and falls when the upper bound is below it. The indicator colors price bars according to whether the close is above or below the reference, and returns the reference together with a second, narrower channel around it.

The bandwidths are controlled by percentage parameters, with example settings provided for the outer envelope and the displayed channel. This gives a configurable way to visualize changing trend direction and price location without relying on a fixed-point band. The document supplies formula code but no trading rules, backtest, or evidence that the signals predict returns. It also does not explain how to choose parameters across instruments or timeframes, so the indicator’s usefulness and sensitivity require separate evaluation.

Key ideas

• The reference line is updated using percentage bounds around each closing price.
• The line moves upward or downward when price bounds cross the existing reference.
• Bar colors indicate whether the close is above or below the reference line.
• A separate percentage channel is plotted around the reference, with bandwidth controlled by a parameter.
• The document gives no trading test or parameter-selection guidance.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.