What are Bollinger Bands?
In one line: Bollinger Bands are a moving average with a band above and below it, set 2 standard deviations away, so they widen when price is jumpy and narrow when it's calm.
How they're built
Bollinger Bands have 3 lines. The usual settings are 20 candles and 2 standard deviations.
- Middle: a 20-candle simple Moving average.
- Upper: the middle plus 2 standard deviations.
- Lower: the middle minus 2 standard deviations.
"Standard deviation" is a measure of how spread out recent prices are. Calm market, small number. Jumpy market, big number.
A simple example
The 20-candle average is 50. The standard deviation is 1.5. So:
- Upper band: 50 + (2 × 1.5) = 53
- Lower band: 50 − (2 × 1.5) = 47
Next week the market goes quiet and the standard deviation drops to 0.5. Now the bands sit at 51 and 49. They've squeezed together.
Why it matters
The bands give you a quick read on Volatility. Wide bands mean big recent swings. Narrow bands mean a quiet patch.
That quiet patch is called a squeeze. Calm periods often end with a bigger move. The squeeze doesn't say which way, only that the market has been unusually still.
In a sideways market, some traders watch for price to stretch to an outer band and drift back toward the middle. That's a Mean reversion idea.
A common mistake
Selling every touch of the upper band. In a strong uptrend, price can "walk the band," touching or closing above it again and again. A touch shows the move is strong. It doesn't show the move is done.
Check the trend on the bigger chart first. A band touch against the trend is a very different thing from one with it.
Want to try them? See how to add an indicator on TradingView.
Questions
What are the best Bollinger Band settings?
20 candles and 2 standard deviations is the standard default. John Bollinger, who created them, suggested adjusting for the market, but the default is a fine place to start.
What does it mean when price goes outside the bands?
The move was unusually large compared with recent candles. It can mean strength, not just a coming reversal.
Are Bollinger Bands good for beginners?
They're easy to read, which helps. Use them as a second opinion next to the chart itself, not as buy and sell signals.
Want the next step? We'll walk you through it.
Four free lessons by email, one every few days — each with a 10-minute exercise on a real chart.
Send Me the Free Lessons 4 short emails · No spam · Unsubscribe anytimeOr see the whole method, step by step:
See What’s Inside the Course Try everything free first. Decide when you're ready. · Open the free chart tool (works in the TradingView phone app)One chart idea a day, in plain English. Follow along: