Level 3: Technical ToolkitInteractive
Bollinger Bands: Volatility Mapping
18 min readUpdated Mar 2026
Quick Check
Bollinger Band width measures:
Price touching the upper Bollinger Band means:
Bollinger Band width measures:
Price touching the upper Bollinger Band means:
Bollinger Bands are a volatility indicator consisting of a 20-period moving average with upper and lower bands at two standard deviations. When bands narrow (squeeze), a large price move is imminent. When bands widen, volatility is high. Approximately 95% of price action falls within the bands.
Bollinger Bands map , how much price is fluctuating. Volatility cycles between compression and expansion, and Bollinger Bands make these cycles visible.
Three lines: a 20 SMA in the middle, upper band at +2 standard deviations, lower band at -2 standard deviations. When volatile, bands widen. When calm, they narrow. ~95% of price action falls within the bands.
Bands narrow to extreme levels (low volatility), then expand into high volatility. Like a coiled spring.
Tighter = More Explosive
Squeezes tighter than any point in the past 6 months tend to produce large moves. Set alerts for BandWidth reaching extreme lows on your watchlist.
Common Mistake
Do not automatically buy the lower band or sell the upper band. This "band bounce" approach works in ranges only. In trends, price walks the bands and this strategy loses money.
Key Takeaways
Try This
Add Bollinger Bands (20, 2) to a daily chart. Find the tightest squeeze in the last 6 months. Which direction did price break? How far did it go? Find a stock in a squeeze now, that is one to watch.
Swingfolio helps you track Bollinger Band squeeze trades and measure their performance over time.
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This educational content is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Trading involves risk of loss. You should consult a qualified financial advisor before making investment decisions. Swingfolio is a trade journaling tool, not a financial advisory service.