Sigma Bands for Flexible Price and Moving-Average Dispersion
Summary
Sigma Bands plots two channels intended to mark ranges containing price about 68% and 95% of the time over a selected lookback. With default settings, the indicator is described as nearly equivalent to Bollinger Bands using the same lookback. Its configurable options include moving-average type and period, applied price, and the number of bars used to calculate dispersion.
The author notes that differences from conventional Bollinger Bands appear with non-default settings, particularly when the moving-average period exceeds one. The same standard-deviation and sigma calculations could also be adapted to other indicators, such as RSI or TVI. The document explains the indicator’s options but gives no trading rules, empirical tests, or evidence that the bands predict reversals or breakouts; the stated frequency ranges should not be treated as guaranteed future coverage.
Key ideas
- The indicator plots bands intended to contain price roughly 68% and 95% of the time over a chosen lookback.
- Users can select among several moving-average types, price inputs, and lookback settings.
- Default settings are described as nearly matching Bollinger Bands with the same period.
- The calculation can be adapted to other indicators, but no trading performance evidence is provided.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.