STARC tapes

The calculation method of the STARC tapes is very similar to the Keltner channel . They were developed by a commodity specialist, but have been used in the equity sector for some time and are a recognized method for calculating price methods, among other things. a. through the VTAD .

calculation

In the STARC band, the ATR ( Average True Range ) is multiplied by a factor (the value 1 is recommended in the literature) and added to the moving average of the closing price in order to obtain the upper band “STARC +”. Hence, to get “STARC-” the moving average of the closing price is subtracted. Usually 15 days are used to calculate the ATR and 6 days for the moving average.

Formulas

${\displaystyle TH_{t}=Max(M_{t},C_{t}-1)=TrueHigh}$

${\displaystyle TL_{t}=Min(L_{t},C_{t}-1)=TrueLow}$

${\displaystyle TR_{t}=TH_{t}-TL_{t}=TrueRange}$

${\displaystyle ATR_{t}{m}=GD_{t}^{arith.,m}(TR)=AverageTrueRange}$

${\displaystyle STARC_{t}^{+}=GD_{t}^{arith.,n}(C)+ATR_{t}{m}*F}$

${\displaystyle STARC_{t}^{-}=GD_{t}^{arith.,n}(C)-ATR_{t}{m}*F}$

interpretation

If the price is above or in the range of the STARC +, the share should not be bought, if it is in the depot, a sale should be considered, especially if the upper band is exceeded. If the price is below or in the range of the STARC–, this can indicate a recovery of the price; if the price falls below this range, a purchase can be considered.

criticism

The STARC method can protect investors from chasing the market and paying a poor cost price. However, similar to the Bollinger Bands, problems arise in strong trend phases when the prices run along a band. It is therefore advisable to check signals with other indicators.

literature

• Oliver Paesler: Technical indicators: the ideal instrument for every success-oriented investor; Methods, strategies, implementation . 5th edition. FinanzBook Verlag, Munich 2011, ISBN 978-3-89879-248-6 .