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Instrument: REA_Envelope

REA_Envelope

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Disclaimer

The graphic studies and any other indication generated by the software should not be considered as personalized investment advice or even as investment recommendations. The setups generated by the software search for market conditions developed on prices in the past and are useful for statistical purposes.

The software is not able to work autonomously and requires various inputs from the trader for pattern research, statistics processing and any other expected functionality.

Description

The envelope channel refers to the upper and lower bands around the price bars, generated by a moving average and a predetermined distance above and below the moving average. The distance can be calculated through a percentage variable above and below the moving average (i.e. 2%, 5% or 10%), or the number of standard deviations (i.e. 1, 2, 3, as in Bollinger waves).

Unlike traditional price channels, the envelope channel is based on standard deviation changing over time in response to a security's volatility, widening or narrowing bands.

This indicator can be used with various techniques, as long as they work together to form upper and lower bands surrounding the price of the stock.

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Download the REA_Envelope for the cTrader platform
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