Indicator Overview

The Cost Bands indicator simulates the short-term holder cost basis using a synthetic positioning model that reconstructs recent participant entry levels from rolling, liquidity-weighted price dynamics. The algorithm derives a dominant cost anchor by aggregating price action over a fixed temporal window with adaptive weighting, then applies a normalised volatility transform to generate multi-sigma deviation envelopes around this anchor. These statistically bounded regimes quantify relative premium and discount states versus inferred recent cost distribution, with band spacing dynamically adjusting to changes in realised variance.

Dual-Ticker Comparison Logic

The Ticker fields allow you to transition from absolute price analysis to relative strength analysis:

• Single Stock Analysis: If Ticker 2 is left blank, the indicator defaults to measuring Ticker 1against US Dollars. This allows you to analyse the asset's individual performance.

• Pair Trading & Ratios: Enter a symbol in both fields (e.g. NVDA vs. TSLA) to analyse the relationship between the two. The indicator automatically calculates the ratio (Ticker 1 / Ticker 2), helping you identify when one asset is becoming "expensive" or "cheap" relative to its peer, independent of broader market direction.

How To Use

Premiums significantly above the VWAP (e.g., crossing +2σ orange or +3σ red bands) signal overextension, potential exhaustion from speculative buying, or inflated valuations during hype cycles, often warranting caution or profit-taking, while deep discounts below VWAP (e.g., into -2σ teal or -3σ deep teal bands) indicate undervaluation, capitulation zones, or attractive entry points amid fear or dilution concerns.