Band Targets by Benjamin L.Cotton
You can calculate the future price movement necessary to cross a moving standard deviation band condition such as a Bollinger Band, emoving the guess-work from systems trading on such elationships.
Here's the logic behind such an indicator as well as
the TradeStation programming that makes it work.
My November 1999 article for STOCKS & COMMODITIES introduced the BogieMA, an indicator that solves
for the future price that
would trigger a moving average crossover. This
type of indicator saves traders from plugging in a
best-guess price in a database until a trade is simulated. However, moving average relationships are relatively
simple to solve; systems that utilize more complex relationships can be much more difficult to solve. I've done the work
for you for one of the most popular indicators around,
To do this, I used two standard deviation bogie indicators.
These indicators solve for the price movement necessary to
trigger a standard deviation band (such as Bollinger Bands)
using the following rule: