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 Gold Customer
Joined: 11/15/2004
Posts: 28
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I understand the definition of Envelope Channel in the online help however I have a question. Let me pose the situation:
- I have a 2000-dma, simple average
- My template is: daily bars, logarithmic scale, zoom to 3
- Envelope channel on the 200-dma settings are: period 1, width 30, average type simple
The question is: When changing the zoom (moving out or in) or when I move the chart back to a past chart (e.g., start the chart on January 1, 2000) and scroll forward using the "]" key, the position of the envelop channel changes. Why?
In fact, the moving averages doesn't change, it is fixed by the prior 200 days' closing prices. But the envelope does change depending on how many days are displayed in the chart template.
I would have expected the envelope to also remain fixed and stationary since it supposedly is calculated on a fixed variable, the 200-dma.
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Registered User
Joined: 7/14/2009
Posts: 5
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how do I build a bullish scan?
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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stock-chartist,
I don't know how Envelope Channels are calculated in TeleChart and have been unable to reproduce them using formulas. The Envelope Channel Width calculations used in TeleChart appear to be very similar to the Linear Regression Channel Width calculations:
Linear regression channel calculations
That said, I have not been able reproduce the Envelope Channel Width calculations exactly. While the calculations of the envelope channels appear to be of a similar form to those of Linear Regression Channels, they appear to use far more data than their Period settings would suggest.
I have spent many hours on this over the years and can still only speculate as to the exact details. That said, I suspect that Period is only used in the calculation of the Moving Average centerline, that the width is independent of the period and that the "period" used in the Width calculations is based on whichever Indicator currently Plotted on the Chart requires the most data.
If you want to Plot Envelope Channels of the type I suspect you were expecting, you could create a Custom Price Channel Indicator.
Select Chart Template | Add Indicator | Price Channel.
- Visible: Checked
- Plot Formula Line: Your choice
- Smoothing Average: (use the Period of the Moving Average centerline)
- Average Type: (use the type of the Moving Average centerline)
- Width Multiplier: (use the percent above and below the MA for the Channels)
- Indicator Line Formula: C
- Channel Width Formula: .1 * C
christof48,
Welcome to the forums. A very good foundation for learning how to use TeleChart can be gained by reviewing the following:
If you are new to TeleChart READ THIS FIRST!
The trainers can't give setting, interpretation or investment advice. Developing a bullish scan would depend on the specific conditions you think are bullish.
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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Gold Customer
Joined: 11/15/2004
Posts: 28
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Bruce, thanks for your response. In reading the information page on Envelope Channels they say, whether it's true or not, that the width measure is equivalent to standard deviation. Therefore, a 30 width is 3 std. dev and a 40 width is 4 std dev (according to the Online Help Files.
But if that's true, then a width of 30 (or 51.2 and 75.6, for example) around a 200 day moving average with a value of, say, 63.4 on September 16, 2009 shouldn't be any different on December 3 if the moving average on that future day happens to be 71.3 and the band values on Dec. 3 were, for example, 60.0 and 82.6.
But on the chart, the value does change by some amount and it's unclear why or how much.
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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If the Width of the Envelope Channels were based on Standard Deviation, I would know how they are calculated. They are not.
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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