Bollinger Bands

Bollinger Bands are in a real sense a map of price volatility. Bollinger Bands charts have three parts. The first part is a curved line in the middle. This is a Moving Average line. The second part is a lower band; and the third part is an upper band. The bands are called Bollinger Bands because John Bollinger devised them. The upper and lower Bollinger Bands are a statistical curve that is placed around the price. In other words they represent a special kind of boundary. Actually the upper and lower bands represents a standard deviation around a moving average. The concept of standard deviation is a statistical concept used to summarize data. It’s seen in most applications as a bell curve. Let’s see how it can be applied to the world of trading.