Bands-Trailing Stop Utility

The Bands-Trailing Stop Utility indicator provides a versatile framework for generating dynamic price bands and trailing stops by applying volatility estimators to any external chart source. This tool allows users to transform basic moving averages or oscillators into comprehensive volatility-based envelopes or trend-following exit points.

Usage

The Usage section describes how the script can be used. To utilize this tool, select an existing indicator on your chart as the "Source" in the settings menu. The utility then calculates an upper and lower boundary based on the selected volatility method and multiplier.

Band Configuration

The multiplier setting (Mult) determines the distance between the source and the bands. A multiplier of 1.0 represents the base volatility, while higher values expand the bands and lower values (including non-integers) contract them toward the source.

Trailing Stop Mode

When Trailing Stop Mode is enabled, the indicator replaces the dual bands with a single dynamic line. This line switches between the upper and lower boundaries based on price crossovers, providing a systematic trend-following mechanism for stop-loss placement or trend identification.

Details

The script operates by calculating the difference between price action and a central tendency estimator (the source). By quantifying this difference through various statistical methods, the tool creates a margin of error that reflects market volatility.

Volatility Estimators

The script includes several methods for calculating the deviation:

• MAE (Mean Absolute Error): A cumulative calculation of the absolute difference between price and source. It does not require a fixed length.
• RMASE (Root Moving Averaged Squared Error): Calculates the square root of the simple moving average of the squared differences.
• ATR (Average True Range): Uses standard market volatility based on the high, low, and close prices over a specific period.
• RANGE: Calculates the difference between the highest and lowest source values over the lookback period.
• STDEV: Uses the standard deviation of price relative to its mean.

Settings

• Source: Defines the input series (e.g., Close, or an external indicator) used as the basis for the bands.
• Length: Sets the lookback period for volatility estimators (excluding MAE).
• Multiplier: Adjusts the width of the bands or the distance of the trailing stop.
• Method: Selects the mathematical algorithm used to estimate volatility (MAE, RMASE, ATR, RANGE, or STDEV).
• Trailing Stop Mode: Toggles between displaying dual volatility bands or a single switching trailing stop line.

FAQ

How do I select an external indicator as the source? In the indicator settings, click the "Source" dropdown and look for the name of the other indicator currently loaded on your chart to link them.

What is the difference between MAE and RMASE? MAE provides a running average of errors without a fixed lookback, while RMASE uses a moving average of squared errors over a specific length, making it more responsive to recent volatility changes.

How can I access the Bands-Trailing Stop Utility? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.