Discussing the article: "Building and testing Keltner Channel trading systems"
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Check out the new article: Building and testing Keltner Channel trading systems.
In this article, we will try to provide trading systems using a very important concept in the financial market which is volatility. We will provide a trading system based on the Keltner Channel indicator after understanding it and how we can code it and how we can create a trading system based on a simple trading strategy and then test it on different assets.
The Keltner Channel indicator was first introduced by Chester Keltner in the 1960s in his book How to Make Money in Commodities. It used the simple moving average and the high/low range in its calculation, but it evolved into the form that is commonly used today to use the Average True Range (ATR) in its calculation. The typical setting for the moving average is 20 periods, the upper and lower bands are calculated as twice the ATR above and below the EMA, and these settings can be adjusted according to user preferences and trading objectives.
The Keltner Channel refers to bullish when the price reaches the Upper band and bearish when the price reaches the lower band because it can be used to identify trend direction. Bands also can be used as support and resistance when prices move between them without a clear up or down trend. In summary, The Keltner Channel is that technical indicator that measures the volatility of financial assets by using the exponential moving average and the average true range.
Author: Mohamed Abdelmaaboud