STARC Bands

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.

BREAKING DOWN '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 Bands®.

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

RELATED TERMS
  1. Turtle Channel

    A trading band created by plotting the highest and lowest prices ...
  2. Currency Band

    A currency system that establishes a trading range that a currency's ...
  3. Keltner Channel

    A volatility based 'envelope' indicator that measures the movement ...
  4. Average True Range - ATR

    A measure of volatility introduced by Welles Wilder in his book: ...
  5. Envelope

    A type of technical indicator typically formed by two moving ...
  6. Linearly Weighted Moving Average

    A type of moving average that assigns a higher weighting to recent ...
Related Articles
  1. Technical Indicators

    Organize Price-Band Relationships In Bollinger Bands®

    Bollinger Bands have become an enormously popular market tool since the 1990s but most traders fail to tap its true potential.
  2. Technical Indicators

    How To Apply Bollinger Bands® With Metatrader 4: Understanding Bollinger Bands®

    Bollinger Bands®, shown in Figure 1, are one of the most widely used volatility indicators in today's market analysis. This technical indicator was developed by John Bollinger in the 198 ...
  3. Stock Analysis

    The 10 Most Oversold Dow Stocks

    Looking at the charts of these blue-chip dividend payers pulls up a quartet of names that may be solid buys on the next significant pullback. Even though the Dow Jones Industrials closed ...
  4. Active Trading

    The Basics Of Bollinger Bands

    This strategy has become one of the most useful tools for spotlighting extreme short-term price moves.
  5. Active Trading

    Tales From The Trenches: A Simple Bollinger Band® Strategy

    Spot extreme short-term price drops and profit on the rebound.
  6. Stock Analysis

    2 Oversold High-Yield Stocks

    Two of Big Pharma’s finest are looking quite oversold at current levels, and while risk remains, both pay handsome yields and maintain sky-high cash positions. As more details emerge from la ...
  7. Technical Indicators

    How To Apply Bollinger Bands® With Metatrader 4: Customizing Bollinger Bands®

    Customizing Bollinger Bands®Regardless of the method used to attach Bollinger Bands® to a price chart, the Bollinger Bands® window will appear. This window has three different tabs ...
  8. Active Trading

    Moving Averages: Strategies

    By Casey Murphy, Senior Analyst ChartAdvisor.com Different investors use moving averages for different reasons. Some use them as their primary analytical tool, while others simply use them as ...
  9. Options & Futures

    The Top Technical Indicators For Options Trading

    Options traders have to pay attention to more indicators than your average stock trader does, including volatility, direction, and duration.
  10. Technical Indicators

    How To Use A Moving Average To Buy Stocks

    The Moving Average indicator is one of the most useful tools to trade and analyze financial markets.
RELATED FAQS
  1. Why are STARC Bands important for traders and analysts?

    Learn what STARC bands are and how the rationale behind their construction provides helpful indications for traders and market ... Read Answer >>
  2. What are the main differences between STARC Bands & Bollinger Bands®?

    Learn about the differences between Bollinger Bands and STARC Bands, two similar volatility band indicators used in technical ... Read Answer >>
  3. What are the best technical indicators that complement the STARC Bands?

    Discover some of the best technical indicators that can be used to complement a trading strategy designed primarily with ... Read Answer >>
  4. How do I use STARC Bands for creating a forex trading strategy?

    Discover an intraday forex trading strategy that can be created using STARC bands in combination with daily pivot point levels ... Read Answer >>
  5. How do I create a trading strategy with Bollinger Bands® and candlesticks?

    Understand a common trading strategy using both Bollinger Bands and candlesticks as key technical indicators, including how ... Read Answer >>
  6. What are the differences between Bollinger Bands® and Donchian Channels?

    Read about the primary differences between Bollinger Bands and Donchian Channels, two technical price charting tools used ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center