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In the Futures Magazine, October 1998, Dennis McNicholl describesthe use of Bollinger Bands and provides a means of making them tighter whenmarkets are trending. He calls them Better Bollinger Bands.



Formula:

pds=Param("Periods",20,2,200);
sd=Param("Standard Deviations",2, 0.01,10);
alpha=2/(pds+1);
mt=AMA( C, alpha );
ut=AMA( mt, alpha );
dt=((2-alpha)*mt-ut)/(1-alpha);
mt2=AMA(abs(C-dt), alpha );
ut2=AMA(mt2,alpha );
dt2=((2-alpha)*mt2-ut2)/(1-alpha);
but=dt+sd*dt2;
blt=dt-sd*dt2;

Plot( C, "Price", colorBlack, styleCandle );
Plot( but, "Upper band", colorRed );
Plot( blt, "Lower band", colorRed );