Chapter
Meander System V.1.0
Originally presented in January/February 2001, this system is based on the mean-
der indicator, which is a price-band indicator that takes all data points within a bar
into consideration when calculating moving-average and standard-deviation lev-
els. Or, more precisely, it calculates the percentage difference between the previ-
ous bar’s closing price (or average price) and the next bar’s different price levels
(open, high, low, and close) before it adds to the latest bar’s closing price (or aver-
age price). For a detailed description of this indicator and for programming code,
refer to “Moving beyond the closing price” (Active Trader, October 2000, p. 60)
and http://www.activetradermag.com/code.htm.
The combination of using all price points and their relative distance from the
previous bar’s close (average price) results in an indicator that hugs price more
closely than other kinds of price bands, making it especially useful for the short-
term trader.
If today’s market action takes us below the lower band (the bands are two
standard deviations away), the system will signal to go long on a limit order, on
the assumption that the market has overextended itself to the short side and in the
short run.
Suggested Markets
Stocks, stock index futures, and index shares (SPDRs, DIAs, QQQs).
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