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2010issue C1210-17

How a JM internal band becomes long and short entry and exit rules

A JM internal band is a 15-period simple moving average of the close, shifted by a fixed percentage offset to form an inner envelope. This archive article follows the historical workflow that turns an upper-band breakout and a lower-band breakdown into long and short entry, exit and confirmation rules.

  • The JM internal band is a 15-period simple moving average of the close, shifted by a fixed percentage offset to form an inner envelope, commonly 2 percent in both directions.
  • A long signal is an upper-band breakout, and a short signal is a lower-band breakdown, each defined by a close that crosses the relevant band after the prior close was on the other side.
  • The intended construction is a trend-aligned entry, so a position opens after price has already turned with the prevailing move rather than buying a decline or shorting a rally at an outer band.
  • The same band rules can close a position or confirm an existing long or short, and a long-only variant can tighten the percentage offset to 1.5 percent so a buy signal appears sooner.
Entries in this reading3 entries
Current trackBreakout system74 readingsRule-based entry193 readingsMoving average465 readings

How the JM internal band is built

The JM internal band is a 15-period simple moving average of the close, shifted up and down by a fixed percentage to form an inner envelope. That average is the center line of the bands.

The upper band is the 15-period average multiplied by 1.02 and the lower band is that average multiplied by 0.98. That placement is a plus-or-minus 2 percent offset, the usual percentage offset in this construction.

How long and short signals are defined

A long signal occurs when the close breaks above the upper band after the prior close was below the prior upper band. That crossing is an upper-band breakout.

A short signal occurs when the close breaks below the lower band after the prior close was above the prior lower band. That crossing is a lower-band breakdown.

Why the construction waits for a turn

The intended construction prefers trend-aligned entry. A position opens only after price has already turned with the prevailing move, rather than buying a falling market or shorting a rising market at an outer band.

Using the same rules after entry

The same band rules can be used to decide when to close a position or to confirm an existing long or short, not only to open one.

A long-only variant can tighten the percentage offset to 1.5 percent so a buy signal appears sooner.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
13 of 23 in the Breakout system track
201339-41 pp.Next on Breakout systemConstructing a three-average trend-aligned breakout systemBefore the template is written, the logic must map to a repeating chart-visible dynamic, be followable with real capital at risk, and fit purchase, data, and upkeep costs.
All readings on this track · 23 readings
  1. 1995Range breakout rules with an expansion filter and moving-average exits
  2. 1995Write a weekly breakout as one parameterized entry and exit
  3. 1995Combining a trend rule, a breakout trigger, and a seasonal filter
  4. 1996Constructing a two-bar clearance breakout from a twenty-session exponential average
  5. 1996Two-bar exponential-average breakout as setup, stop, and flatten
  6. 1998A noise-offset breakout judged after walk-forward re-estimation
  7. 1998Gating a weekly average crossover with stored support and resistance
  8. 1998Moving-average candidates gated by support and resistance
  9. 2000Constructing next-close envelope targets for breakout stops
  10. 2001February soybean high breakout and June trailing stop
  11. 2005Box-and-breakout states written as ordered entry and exit rules
  12. 2007Match trend and breakout rules to the market condition
  13. 2010How a JM internal band becomes long and short entry and exit rules
  14. 2013Constructing a three-average trend-aligned breakout system
  15. 2016Volume-confirmed breakout entry rules
  16. 2017How to construct exponential standard deviation bands
  17. 2017Four-day green candle breakout as one swing procedure
  18. 2018Constructing inverse ETF breakouts above a 200-day average
  19. 2018Evaluating trend, breakout, and regression rules by average robustness
  20. 2019A crypto pair breakout after a sideways range
  21. 2019Next-session breakout rules after a high-volume close
  22. 2020Altcoin dual-stop breakout with a timed exit
  23. 2020Critiquing required stops in mechanical breakout systems
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1995Range breakout rules with an expansion filter and moving-average exits1996Two-bar exponential-average breakout as setup, stop, and flatten1998Moving-average candidates gated by support and resistance1988Early entry as the session switch for an opening-range breakout1989Evaluating inside-day filters on opening-range breakouts