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.

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. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth ...
  2. Bollinger Band®

    A band plotted two standard deviations away from a simple moving ...
  3. Envelope

    A type of technical indicator typically formed by two moving ...
  4. Technical Analysis

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

    A simple, or arithmetic, moving average that is calculated by ...
  6. Average True Range - ATR

    A measure of volatility introduced by Welles Wilder in his book: ...
Related Articles
  1. Technical Indicators

    Discovering Keltner Channels and the Chaikin Oscillator

    It's time to acquaint yourself with some lesser-known yet effective technical indicators.
  2. Forex Education

    Capture Profits Using Bands And Channels

    Donchian channels, Keltner channels and STARC bands are not as well known as Bollinger bands, but they offer comparable opportunities.
  3. Trading Strategies

    How To Buy Penny Stocks (While Avoiding Scammers)

    Penny stocks are risky business. If want to trade in them, here's how to preserve your trading capital and even score the occasional winner.
  4. Chart Advisor

    Value Stocks Offer Stability in a Volatile Market

    With volatility on the rise, investors are turning to segments of strength such as value stocks. We'll take a look at several ETFs that could be worth a closer look.
  5. Chart Advisor

    Stocks to Short...When the Dust Settles

    Four short trades to consider, but not quite yet. Let the dust settle and wait for a pullback to resistance for a higher probability trade.
  6. Technical Indicators

    Using Moving Averages To Trade The Volatility Index (VIX)

    VIX moving averages smooth out the natural choppiness of the indicator, letting traders and market timers access reliable sentiment and volatility data.
  7. Chart Advisor

    Traders Step Back to Assess Commodities Damage

    Traders are turning to these exchange-traded notes and exchange-traded funds to analyze key commodities and determine what could be coming next.
  8. Chart Advisor

    Strategizing for a Market Fall...or Rally

    The downtrend isn't confirmed yet, so be prepared with trades for whether the stock market rallies or continues to fall. Here's how to do it.
  9. Trading Strategies

    Are You a Trend Trader or a Swing Trader?

    Swing traders and trend traders execute market timing strategies that require different skill sets.
  10. Technical Indicators

    Detrended Price Oscillator Trading Strategies

    The detrended price oscillator (DPO) offers a simple approach to cycle analysis, removing momentum and long-term trends from the equation.
RELATED FAQS
  1. What are the best technical indicators that complement the STARC Bands?

    Some of the best technical indicators to complement use of the STARC bands are other oscillators or momentum indicators and ... Read Full Answer >>
  2. What is a common strategy traders implement when using STARC Bands?

    Stoller Average Range Channels (or STARC), Bands were created by Manning Stoller in the 1980s to help generate trading signals ... Read Full Answer >>
  3. Why are STARC Bands important for traders and analysts?

    STARC bands, or Stoller average range channels, provide traders and market analysts with indications of the level of volatility ... Read Full Answer >>
  4. How do I use STARC Bands for creating a forex trading strategy?

    STARC bands are similar to Bollinger Bands in terms of forming a channel that expands or contracts in relation to price movement ... Read Full Answer >>
  5. What are the top technical indicators used for Range-Bound Trading strategies?

    Using good trend-following indicators in a market that's just trading sideways, up and down within a narrow range either ... Read Full Answer >>
  6. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  2. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  3. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  4. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  5. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
  6. Wedding Warrant

    A warrant that can only be exercised if the host asset, typically a bond or preferred stock, is surrendered. Until the call ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!