A volatility indicator with three lines — a moving average and two bands set at standard deviations above and below it.
Bollinger Bands plot a moving average (typically 20 periods) with two outer bands set 2 standard deviations above and below it. The bands automatically widen during high volatility and contract during low volatility. About 95% of price action happens within the bands.
The bands are best used as a volatility map, not a buy/sell signal. When the bands are tight (low volatility, called a "squeeze"), a big move is usually coming. When the bands are wide, the market is in an active trend or news event. Touches of the upper or lower band aren't automatic reversal signals — in strong trends, price can ride the band for days.
The most reliable Bollinger setup is the squeeze: when bands contract to a multi-week low, a breakout follows within a few sessions. The direction of the breakout usually matches the higher timeframe trend.
Gold's daily Bollinger Bands contracted to a 6-month low in early 2024 right before the breakout from $2,080. The expansion that followed delivered a $300 rally over the next eight weeks.
Frequently asked about bollinger bands
What is a bollinger bands in trading?+
A volatility indicator with three lines — a moving average and two bands set at standard deviations above and below it.
When will I see bollinger bands used in real trading?+
On any chart where you want a quick read on volatility. The default 20-period, 2-standard-deviation setting is fine for most markets.
What is the most common mistake traders make with bollinger bands?+
Shorting every upper band touch and longing every lower band touch. In strong trends, price walks the band for sessions. Mean-reversion BB trades only work in ranges.
What do experienced traders know about bollinger bands that beginners don't?+
When bands contract to their narrowest level in 6 months, you're looking at a Bollinger squeeze that almost always resolves with a major trend move. Mark these on weekly charts and wait.
Read the lesson here. Mark the chart on TradingView. Compare brokers with the checklist.
TradingView is the chart workspace most learners already recognize: watchlists, alerts, drawings, and clean multi-market charts. Broker research stays methodology-first: jurisdiction, costs, platform, withdrawals, and risk before any account decision.