Blog : Bollinger Bands Indicator
Bollinger Bands
Bollinger Bands, created by John Bollinger in the early 1980s, consist of three lines plotted in relation to security prices. The middle line is typically a 20-day Simple Moving Average (SMA), though the period can be adjusted. The upper and lower bands are set two standard deviations away from the SMA, though this can also be modified. Bollinger Bands measure volatility by observing the relationship between the bands and the price.
| Bollinger Bands Inputs | |||
|---|---|---|---|
| Trend Following | Mean Reversion | ||
| Length | 20 | Length | 20 |
| Standard Deviation | 2.0 | Standard Deviation | 2.0 |
| Source | close | Source | close |
| Bollinger Bands | Long - Entry Trigger | Long - Exit Trigger | Short - Entry Trigger | Short - Exit Trigger |
|---|---|---|---|---|
| Trend Following | Price crossover Upper Band | Price crossunder Middle Band | Price crossunder Lower Band | Price crossover Middle Band |
| Mean Reversion | Price crossunder Lower Band | Price crossover Middle Band | Price crossover Upper Band | Price crossunder Middle Band |
| Bollinger Bands | Long - Entry Confluence | Long - Exit Confluence | Short - Entry Confluence | Short - Exit Confluence |
| Trend Following | Price > Upper Band | Price < Middle Band | Price < Lower Band | Price > Middle Band |
| Mean Reversion | Price < Lower Band | Price > Middle Band | Price > Upper Band | Price < Middle Band |