What are Bollinger Bands?

Bollinger Bands are a technical indicator for stock charts created by John Bollinger in the early 1980s. Bollinger Bands can also be refered to as trading bands. The purpose of the Bollinger is to provide a projected high and low price by the placement of bands on the stock chart. The Bollinger Bands appear on the chart as 3 bands.

How are Bollinger Bands calculated?

The Bollinger Bands appear on the chart as 3 bands. The Middle band being a simple moving average usually plotted in a 20 period. The upper and lower bands are calculated around a simple moving average plus or minus a standard deviation.

How are Bollinger Bands plotted?

1. Bollinger Bands are plotted at a standard deviation above and below a simple moving average of the price. The upper band is the moving average plus a standard deviation, and the lower band is the moving average less the standard deviation.