Bollinger Bands wrap price in a moving-average basis with an upper and lower band set a number of standard deviations away. The bands widen when volatility rises and contract when it falls, so the distance between them is itself information.
How traders use it
- A squeeze of narrow bands often precedes a volatility expansion and breakout.
- Tags of the outer band show how stretched price is from its mean.
- In a range, band touches can mark mean-reversion entries; in a trend, continuation.
See it in dtcharts
Add Bollinger Bands from the indicators panel in the dtcharts terminal, or grab ready-to-paste code for MetaTrader, TradeStation and TradingView in the Bollinger Bands Traders' Tips article.