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Apply Bollinger Band Indicator

Bollinger Bands measure volatility by plotting a series of three bands. The middle band represents the moving average (SMA or WMA or EMA). The upper band is a set number of standard deviations higher than the middle band (generally 2), and the lower band is a set number of standard deviations (generally 2) lower than the middle band. You set the distance of standard deviation when you create the study.

 

To apply Bollinger Bands

  1. From within a chart, from the Edit menu select Studies.

  2. Choose Bollinger Bands and Add the study.

  1. Complete parameters as necessary.

Bollinger Bands are calculated like this:

ML = Avg. (N)

TL = ML + (D*StdDev)

BL = ML — (D*StdDev)

Where:

ML - middle line

Avg(N) - SMA or WMA or EMA

TL - top line

BL - bottom line

N — is the number of periods used in calculation;

StdDev — the Standard Deviation.

StdDev = SQRT(SUM[(CLOSE — SMA(CLOSE, N))^2, N]/N)

 

Important Disclosures