“On using volatility bands” by Ahmet Tezel and Suzan
Koknar-Tezel introduces two different volatility band trad-ing
systems, one system using bands based on moving
averages and the other based on regression bands. To plot the
moving average asymmetric volatility price bands (MAAVPB)
in MetaStock for Windows, simply plot Bollinger bands
using 11 periods and 1.7 standard deviations. Then click your
right-mouse button while the cursor is over the lower band
and choose properties. Change the standard deviations to 2.
This plot will now appear exactly as the bands discussed in
To plot the regression asymmetric volatility price bands
(REGAVPB) in MetaStock for Windows, simply plot standard
error bands using 21 periods, one for standard errors and one
for the smoothing periods. Then click your right-mouse
button while the cursor is over the lower band and choose
properties. Change the standard errors to 1.5.
To recreate the systems in MetaStock for Windows, choose
System Tester from the Tools menu. Next, choose New and
enter the following trading rules and stop conditions. After
entering this information, choose Options and change the
trade delay to 1, then change the Trade Price to Open. If you
have MetaStock 6.5, enter the first set of formulas. MetaStock
6.5 allows variables that will allow you to change the periods
when testing much more easily.