Bollinger Bands
Bollinger Bands are a volatility indicator consisting of three lines: a simple moving average (middle band) and two standard deviation lines (upper and lower bands).
Dynamic Chart Demo
* This chart uses synthetic data to demonstrate the indicator's behavior in typical market conditions.
Core Usage
Advantages
- Adjusts dynamically to market volatility
- Identifies potential breakout opportunities (squeeze)
- Acts as dynamic support and resistance zones
Limitations
- Price "walking the bands" can lead to false reversal signals
- Standard deviation calculation is based on past data (lag)
- Usually cannot be used as a standalone entry/exit tool
Calculation Logic
Understanding the mathematical logic behind indicators helps you interpret signals more accurately and avoid misuse in unsuitable market environments.
Common Trading Strategies
BB Squeeze Breakout
Trade the explosive breakout following a period of band contraction.
Band Bounce
In ranging markets, buy at the lower band and sell at the upper band.
Best For
「Volatility analysis and mean reversion strategies.」
Note: Technical indicators are mathematical calculations based on historical price and volume. They should be used as part of a comprehensive trading system, not as a standalone entry signal.