hi Specialist
I got the idea for KBA Bands in my system from Dascore - another HC member. He used alot of Sigma bands in his charts so I asked him about it. the snippet below is Dascore's explaination from a past email.
I think he can explain it better.
" Kirshenbaum Bands which are very close to the sigma-p bands in
terms of the extreme most outer bands.
Essentially you are working to program and scan for stocks that have hit the 1% band
to identify stocks that are ready to move ie either down or up, and so the use of these
KBA is strongly recommended, seeing that they are the alternative to the use of sigma
p bands. Bollinger bands are of course less desirable.
Here is the way how you can program those bands and write up the code for your
software, after my signature line.
Please let me know once you have a beta version ready to test or use."
Paul Kirshenbaum, a money manager and mathematician with a Ph.D. in economics from NYU, submitted
this rather unique trading band which is “de-trended.”
Kirshenbaum Bands are similar to Bollinger Bands (see BOL-C) in that they measure market volatility.
However, rather than use standard deviation of a moving average for band width, they use the standard
error of linear regression lines of the close. This has the effect of measuring volatility around the current
trend, instead of measuring volatility for changes in trend.
My system is using the below parameters to contruct the bands.
Parameters:
Periods (P): The period used in the Exponential Moving Average calculation. = 5 days.
Linear Regression Periods (L): The period used in constructing the lines for Linear Regression. = 10 intervals.
Deviations (N): Number of deviations used. That is, the Standard Error value can be multiplied by a factor
to expand the bands. Mr. Kirshenbaum recommends a value of 1.75.
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