STARC Bands

AAA

DEFINITION of 'STARC Bands'

A type of technical indicator that is created by plotting two bands around a short-term simple moving average (SMA) of an underlying asset's price. The upper band is created by adding a value of the average true range (ATR) - a popular indicator used by technical traders - to the moving average. The lower band is created by subtracting a value of the ATR from the SMA.

Upper STARC band = SMA + ATR*
Lower STARC band = SMA - ATR*

* The average true range (ATR) is generally multiplied by a user-specific multiplier factor before being added/subtracted from the SMA.

INVESTOPEDIA EXPLAINS 'STARC Bands'

Most traders use a move toward the upper band to signal an increased probability that the price will pull back toward the moving average, and a move toward the lower band as a signal that the price may head back higher. Other traders believe a move beyond the bands signals an increase in momentum. STARC bands generally use a six-period moving average, and the average true range factor is usually multiplied by two before being added/subtracted from the SMA.

This indicator is similar in calculation and interpretation to Bollinger BandsĀ®.

STARC is an acronym for Stoller Average Range Channels. The indicator is named after its creator, Manning Stoller.

RELATED TERMS
  1. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth ...
  2. Envelope

    A type of technical indicator typically formed by two moving ...
  3. Average True Range - ATR

    A measure of volatility introduced by Welles Wilder in his book: ...
  4. Bollinger Band

    A band plotted two standard deviations away from a simple moving ...
  5. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  6. Simple Moving Average - SMA

    A simple, or arithmetic, moving average that is calculated by ...
Related Articles
  1. Technical Indicators

    Discovering Keltner Channels and the ...

  2. Forex Education

    Capture Profits Using Bands And Channels ...

  3. Technical Indicators

    Are Bollinger BandsĀ® useful for analyzing ...

  4. Chart Advisor

    Traders Fight To Push Corn Prices Higher

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center