Weighted Centers and Deviation Bands for Adaptive Price Analysis

Summary

This indicator builds a rolling center and surrounding deviation bands from price data. Users can choose among several centers, including mean, median, trimean, midhinge, midrange, root mean square, cubic mean, and contraharmonic mean. Available spread measures include standard deviation, average absolute deviation, median absolute deviation, and range divided by four. The bands are plotted at one, two, and three times the selected spread around the chosen center.

The calculation can apply a power transform and weights observations by recency and inferred volume delta, with settings to disable either weighting. The description argues that the choice of spread should suit the data before selecting a center, and discusses robust alternatives when values contain extremes or form clusters. It offers statistical intuition and implementation details, but no market-specific evaluation, signal rules, or performance results. The proposed interpretations of distribution shapes and some less conventional center-spread pairings are not validated with evidence in the document, so traders should treat the bands as descriptive tools and test any trading use independently.

Key ideas

• The indicator lets users select different centers and spread measures for rolling price data.
• It plots bands one, two, and three selected deviations from the center.
• Optional weighting emphasizes recent observations and bars with larger inferred volume delta.
• A power transform can alter the scale used for calculating the center and spread.
• The document provides no tested trading rules or performance evidence for using the bands as signals.

Tags

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