Victorial
Active member
Bollinger Bands (BB) and the Keltner Channel are two of the most used indicators by experts. Channel trading is Bollinger bands, moving averages which are used to know when a stock is oversold or overbought as traders look at them in the function of markets' movement. Both tools help in knowing how volatile the market can be, but they have a few differences. The Keltner Channel is a volatility-based tool that uses two bands, and the average true range to set the channel distance below, above the Exponential Moving Average (EMA). Keltner channels are used to know when a market has stretched too far from the MA.
They are lagging tools that exist after a price movement which also shows when a price ever happens outside the normal behavior of price. Keltner channels work by combining the average true range, and then plots multiples of the Average True Range (ATR) above, middle, or below the Exponential MA by using bands. Settings can be changed to suit any analyst or trading platform. Bands are needed to know how tight markets can test the lower, upper bands. A tight band will be suitable for scalping or day trading with the Keltner channel, but not best for long-term trading. All three of these lines move with prices, creating a channel for placing easy trades.
Keltner channels are useful because they can make a trend more easily visible. When a market is trending higher, prices should reach or come closer to the upper band, and even move past them. Markets should also stay above the lower band while it stays above the middle band. When the market is trending short, markets should reach or come closer to its lower band or even go beyond it. It must stay below the upper band or stay below the middle band. This indicator should be set up to meet these rules to avoid running losses. When markets are moving higher, but are not reaching the upper band, these channels may be too wide.
A change must be made by lowering the multiplier to avoid false signals. Similarly, when prices are trending higher, touching a lower band while doing it, channels may be too tight. This can be corrected by increasing its multiplier for a perfect Keltner strategy. Once set up properly, a general strategy is to buy during a trending high, sell when prices rally to the middle line. While Keltner uses averages, Bollinger Bands (BB) use standard deviations to know when to exit or enter a position. Bollinger Bands are known for giving clear signals for buying or selling.
There are two bands; each set at a distance of two Standard Deviations from the security's 21-day simple moving average (SMA). Traders can use both bands to place sell orders at the upper band limit, and buy orders at the lower band limit. Keltner Channel uses EMA while Bollingers use SMA as EMAs react faster to changes in the market than SMAs. A reliable signal given by Bollinger is called the Bollinger bands squeeze. Some analysts use both the Keltner channel, Bollinger Bands to show the squeeze. When Bollinger is inside the Keltner, a squeeze is on, showing a trading range is occurring.
As a chart is set up, movements of the band outside a channel serve as a trigger point either to a downside or to a top high. This would mean that prices are about to go on a run from a ranging move. Both methods are simple to use, but a trader must not be misled as they both require effort in determining the overall direction. All methods including candlesticks patterns need adequate skills to get the right strategy in making good profits.
I don't usually use Keltner's channel as my indicator. I have used Bollinger Bands many times and it is safe a little bit
They are lagging tools that exist after a price movement which also shows when a price ever happens outside the normal behavior of price. Keltner channels work by combining the average true range, and then plots multiples of the Average True Range (ATR) above, middle, or below the Exponential MA by using bands. Settings can be changed to suit any analyst or trading platform. Bands are needed to know how tight markets can test the lower, upper bands. A tight band will be suitable for scalping or day trading with the Keltner channel, but not best for long-term trading. All three of these lines move with prices, creating a channel for placing easy trades.
Keltner channels are useful because they can make a trend more easily visible. When a market is trending higher, prices should reach or come closer to the upper band, and even move past them. Markets should also stay above the lower band while it stays above the middle band. When the market is trending short, markets should reach or come closer to its lower band or even go beyond it. It must stay below the upper band or stay below the middle band. This indicator should be set up to meet these rules to avoid running losses. When markets are moving higher, but are not reaching the upper band, these channels may be too wide.
A change must be made by lowering the multiplier to avoid false signals. Similarly, when prices are trending higher, touching a lower band while doing it, channels may be too tight. This can be corrected by increasing its multiplier for a perfect Keltner strategy. Once set up properly, a general strategy is to buy during a trending high, sell when prices rally to the middle line. While Keltner uses averages, Bollinger Bands (BB) use standard deviations to know when to exit or enter a position. Bollinger Bands are known for giving clear signals for buying or selling.
There are two bands; each set at a distance of two Standard Deviations from the security's 21-day simple moving average (SMA). Traders can use both bands to place sell orders at the upper band limit, and buy orders at the lower band limit. Keltner Channel uses EMA while Bollingers use SMA as EMAs react faster to changes in the market than SMAs. A reliable signal given by Bollinger is called the Bollinger bands squeeze. Some analysts use both the Keltner channel, Bollinger Bands to show the squeeze. When Bollinger is inside the Keltner, a squeeze is on, showing a trading range is occurring.
As a chart is set up, movements of the band outside a channel serve as a trigger point either to a downside or to a top high. This would mean that prices are about to go on a run from a ranging move. Both methods are simple to use, but a trader must not be misled as they both require effort in determining the overall direction. All methods including candlesticks patterns need adequate skills to get the right strategy in making good profits.
I don't usually use Keltner's channel as my indicator. I have used Bollinger Bands many times and it is safe a little bit
