# Stoller Average Range Channel (STARC) Bands: Definition, Application, and Examples

Last updated 03/14/2024 by

Alessandra Nicole

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Summary:
Stoller average range channel (STARC) bands, often referred to as STARC bands, are a technical analysis tool utilized by traders to identify potential market trends and trading opportunities. Developed by Manning Stoller, these bands consist of two lines placed above and below a simple moving average (SMA) of an asset’s price. By incorporating the average true range (ATR), STARC bands offer insights into potential support and resistance levels, aiding traders in decision-making. Understanding the calculation, interpretation, and application of STARC bands is essential for traders seeking to enhance their trading strategies.
Stoller average range channel (STARC) bands, commonly known as STARC bands, are a technical analysis tool widely used in the finance industry. Developed by Manning Stoller, these bands are utilized by traders to gauge potential market trends and identify trading opportunities. STARC bands consist of two lines positioned above and below a simple moving average (SMA) of an asset’s price. The calculation of STARC bands involves incorporating the average true range (ATR), providing traders with insights into potential support and resistance levels.

## Understanding STARC bands

### Calculation of STARC bands

The calculation of STARC bands involves several steps:
1. Selecting SMA length: Traders typically choose an SMA length ranging from five to ten periods.
2. Determining ATR multiple: An ATR multiple is selected, commonly set at two times the ATR.
3. Calculating SMA: The SMA of the asset’s price is computed.
4. Computing upper and lower bands: The ATR multiplied by the chosen multiple is added to the SMA to obtain the upper band (STARC band+). Conversely, the ATR multiplied by the multiple is subtracted from the SMA to obtain the lower band (STARC band-).

### Interpreting STARC bands

STARC bands serve as envelope channels, indicating potential support and resistance levels. The upper band represents the security’s resistance price level, while the lower band denotes the support price level. Traders typically sell when the price approaches the upper band and buy when it nears the lower band. This strategy is advantageous during uptrends or ranging markets. Conversely, in downtrends, traders may opt to short near the upper band and cover positions near the lower band.
It’s important to acknowledge that prices can persistently move along a band for extended periods. Therefore, traders should exercise caution and implement risk management techniques, such as stop losses, to mitigate potential losses.
WEIGH THE RISKS AND BENEFITS
Here is a list of the benefits and drawbacks to consider.

### Pros

• Provides potential support and resistance levels.
• Helps identify buy and sell signals.

### Cons

• Prices may persistently move along a band, leading to potential false signals.
• Reliance solely on STARC bands for trading decisions may result in losses.

### How do traders use STARC bands?

Traders use STARC bands to identify potential support and resistance levels. They typically sell when the price approaches the upper band and buy when it nears the lower band. Additionally, STARC bands can aid in determining buy and sell signals based on market conditions.

### What parameters are involved in calculating STARC bands?

The calculation of STARC bands requires selecting an SMA length, determining an ATR multiple, and computing the upper and lower bands accordingly. Traders adjust these parameters based on their trading preferences and market conditions.

### Can STARC bands be used in conjunction with other technical analysis tools?

Yes, traders often use STARC bands alongside other technical analysis tools such as moving averages, oscillators, and volume indicators to confirm signals and enhance trading strategies.

## Key takeaways

• STARC bands consist of two lines placed above and below a simple moving average (SMA) of an asset’s price.
• Traders use STARC bands to identify potential support and resistance levels, aiding in decision-making during trading activities.
• The calculation of STARC bands involves selecting SMA length, determining ATR multiple, and computing upper and lower bands accordingly.
• Interpreting STARC bands involves recognizing potential support and resistance levels, with trading strategies focusing on buying near the lower band and selling near the upper band.
• Traders should exercise caution when relying solely on STARC bands for trading decisions and implement risk management techniques to mitigate potential losses.