Upper Band
-
Middle Band (SMA)
-
Lower Band
-
Bandwidth (%)
-
When Should You Use This?
Use Bollinger Bands to identify when a stock is quiet (bands narrow = squeeze, breakout coming) or volatile (bands wide). Price touching the lower band in an uptrend is a buying opportunity; touching the upper band in a downtrend is a selling signal.
How It Works
1
Enter Price Data
Paste at least 20 closing prices. The last 20 will be used for the calculation.
2
Set Parameters
Standard settings: 20-period SMA with 2 standard deviations. Some traders use 2.5 for fewer signals.
3
Interpret Bands
Narrow bandwidth = volatility squeeze (breakout coming). Price near upper band = relatively expensive. Price near lower band = relatively cheap.
Frequently Asked Questions
Bollinger Bands are a volatility indicator: a middle band (SMA) with upper and lower bands placed 2 standard deviations away. They expand during volatile periods and contract during quiet periods.
A squeeze occurs when the bands narrow to their tightest in a period. It signals that a big move is coming — though it doesn't tell you the direction.
Not always. In strong trends, price can 'walk the band' (stay near the upper or lower band). Use other indicators to confirm reversals.
%B measures where price is relative to the bands. %B = 1 means at the upper band, %B = 0 means at the lower band, %B = 0.5 means at the middle.
Yes. 10-period with 1.5 std dev is more reactive (day trading). 50-period with 2.5 std dev is smoother (position trading). The 20/2 default works well for swing trading.