Skew BandsJust as Bollinger bands plot the standard deviation of the price of ticker either side of the its mean, SkewBands attempts to plot both the standard deviation and skew around the mean.
First it finds the simple movement average of the prices of a period, it then uses this value to find the standard deviation and skew of the prices over that period, and then it fits a smooth probability distribution using these values, it plots contours at the points where the probability distribution reaches 5/6 (purple) 2/3 (blue) 1/2 (cyan) 1/3 (green) or 1/6 (yellow), of its peak value.
SkewBands thus predict that price will be inside the purple bands 1/6 of the time, between the blue bands 1/3 of the time, between the cyan bands 1/2 of the time, the green bands 2/3 of the time and the yellows bands 5/6s of the time. Since the skew has a definite direction, the bands need are not symmetrical and thus point out peaks in a particular direction.
Using the edit button, you can change the number of percentiles plotted, you can change the period, and finally you can change weather or not the mean, skew and std, are calculated using the final point of the bars, or the central point.
Using the final point, SkewBands look similar to Bolinger Bands
Using the central point, SkewBands follow the stocks movements all lot better.
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