Bollinger Bands (บอลลิงเจอร์ แบนด์)

Bollinger Bands are an indicator created by John Bollinger. They are drawn on the price chart and have three lines:

• Middle band: a moving average, usually a 20-period Simple Moving Average (SMA).
• Upper band: the middle band plus 2 standard deviations.
• Lower band: the middle band minus 2 standard deviations.

Standard deviation is a way to measure how much price moves away from its average. When price swings widely, the bands spread apart. When price is quiet, the bands move closer together.

Simple example

Suppose EURUSD has a 20-period SMA of 1.1000, and the standard deviation of recent prices is 0.0050.

• Upper band = 1.1000 + (2 × 0.0050) = 1.1100
• Lower band = 1.1000 − (2 × 0.0050) = 1.0900

The distance between the bands is 0.0200, which is 200 pips. If volatility falls, this distance shrinks. If volatility rises, it grows.

Why it matters

Bollinger Bands give you a quick picture of how volatile the market is and whether price is high or low compared with its recent average. Traders also watch for a "squeeze", when the bands become unusually narrow after a quiet period.

Common beginner mistake

Many beginners think that price touching the upper band means "sell" and touching the lower band means "buy". A touch is not a signal on its own. In a strong trend, price can stay near one band for a long time. Use Bollinger Bands together with other tools, and always plan your Stop Loss.