to the . When it comes to analysis, the Channel
Width was created in the same way as the Bandwidth technical indicator was.
As was mentioned above the Channel Width is used in to measure
. is one of the most important parameters in .
A price trend is not just about a price change. It is also about traded during this
price change and of a this price change. When a technical analyst focuses his/her
attention solely on price analysis by ignoring and , he/she only sees a part
of a complete picture only. This could lead to a situation when a trader may miss something and
lose money. Lets take a look at a simple example how may help a trader:
Most of the price based technical indicators are lagging indicators.
When price moves on low , it takes time for a price trend to change its direction and
it could be ok to have some lag in an indicator.
When price moves on high , a price trend changes its direction faster and stronger.
An indicator's lag acceptable under low could be financially suicidal now - Buy/Sell signals could be generated when it is already too late.
Another use of - very popular one - it is to adapt a stop loss strategy to it:
Smaller stop-loss recommended in low periods. If it is not done, a stop-loss could
be generated when it is too late.
Bigger stop-loss recommended in high periods. If it is not done, a stop-loss could
be triggered too often and you may miss good trades.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.