{"id":992,"date":"2019-08-09T16:00:33","date_gmt":"2019-08-09T13:00:33","guid":{"rendered":"http:\/\/roboforex.com/blog\/?p=992"},"modified":"2026-05-26T10:53:19","modified_gmt":"2026-05-26T07:53:19","slug":"bollinger-bands-indicator-description","status":"publish","type":"post","link":"https:\/\/roboforex.com/blog\/blog\/2019\/08\/09\/bollinger-bands-indicator-description\/","title":{"rendered":"Using Bollinger Bands: Indicator Description"},"content":{"rendered":"\n

In 1984, John Bollinger<\/strong> decided to create a system of analysis for investing, and as a result of long and scrupulous work he reached his goal at the beginning of the 90s. The indicator was named after its creator — Bollinger Bands<\/strong>. The name differs from language to language, but the essence remains the same; a full description of the indicator and the trading method is given in the book \"Bollinger on Bollinger Bands\". The indicator on the chart looks like three lines; it may be combined with other indicators<\/a> in a separate window.<\/p>\n\n\n\n

In the description of the indicator in the book \"Bollinger on Bollinger Bands\", it is said that the price remains at the borders of the lines 95% of the time and escapes those borders in 5 remaining percent. If volatility<\/a> on the market is low, the upper and the lower lines are close to one the other, while the price is trading between them; the higher the volatility, the wider the channel formed by the three lines. According to the classification, the Bollinger Bands are a trend indicator as it shows both flats and directed price movements. The timeframe<\/a> may be anything from M1 to a year. <\/p>\n\n\n\n

\"Bollinger<\/a>
Bollinger Bands<\/figcaption><\/figure>\n\n\n\n

The Bollinger Bands indicator is based on the Simple Moving Average<\/a> (also known as ML) with a period 20; this is the central line, on the basis of which the upper and the lower lines are drawn. The upper line is the SMA (ML) plus 2 standard deviations, the lower line is the SMA (ML) minus 2 standard deviations. The settings of the Moving Average<\/a> can be customized: instead of the basic calculation by the closing price, calculation by the opening candlestick price may be used, as well as its maximal and minimal values. A shift may be used. In some cases, it is set as 1, which is a shift forward by one candlestick, but other values may be introduced. Apart from calculating the Bollinger Bands on the basis of the Simple Moving Average, the indicator may also be based on the Smoothed and Exponential Moving Averages. The parameters are selected for each particular task and trading situation.<\/p>\n\n\n\n

<\/span>Calculation of the Bollinger Bands <\/span><\/h2>\n\n\n\n

The formula for the Bollinger Bands calculation on the example of an SMA:<\/p>\n\n\n\n

The main (middle) line<\/strong>:<\/p>\n\n\n\n

ML = SUM(CLOSE N)\/ N = SMA (CLOSE N), where: <\/p>\n\n\n\n