23 Feb 2020
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This ProBuilder code snippet demonstrates how to create normalized volatility bands around a moving average of relative strength. The normalization process adjusts the upper band to 100 and the lower band to 0, making it easier to compare and visualize changes in volatility.
//---Settings
CloseMAPeriod = 144
RMAPeriod = 21
UpperValue = 3.0 //"Upperbands %"
LowerValue = 3.0 //"Lowerbands %"
//---end of settings
R = Close / Average[CloseMAPeriod]
RAve = Average[RMAPeriod](R)
UpperBand = RAve * (1 + (UpperValue / 100))
LowerBand = RAve * (1 - (LowerValue / 100))
RValue = ((R - LowerBand) / (UpperBand - LowerBand)) * 100
RETURN 100, 0, RValue as "R"
This code snippet is structured to calculate and plot normalized volatility bands based on the relative strength of a financial instrument. Here’s a breakdown of the code:
- Settings Block: Defines the parameters for the moving averages and the percentage values for the upper and lower bands.
- Relative Strength Calculation: The variable R is calculated as the ratio of the current close price to the moving average of the close price over a specified period (CloseMAPeriod).
- Average of Relative Strength: RAve computes the moving average of the relative strength over another specified period (RMAPeriod).
- Upper and Lower Bands Calculation: These are calculated by adjusting the average relative strength (RAve) by a specified percentage (UpperValue and LowerValue).
- Normalization of R: The variable RValue normalizes the relative strength value R between the calculated upper and lower bands, scaling it to a range of 0 to 100.
- Return Statement: Outputs the constant values 100 and 0, along with the normalized relative strength value RValue, which can be plotted on a chart to visualize the volatility bands.
This approach helps in visualizing how the current price’s relative strength compares to its historical volatility, scaled in a normalized manner.
Related Post
Check out this related content for more information:
https://www.prorealcode.com/topic/having-trouble-adding-volatility-bands-to-price-chart/#post-102594
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