Bollinger Bands

Bollinger Bands are a volatility indicator created by John Bollinger: a middle moving average with an upper and lower band placed a number of standard deviations away. The bands widen when volatility rises and contract when it falls.

The middle band is typically a 20-period simple moving average. The upper and lower bands sit two standard deviations above and below it. Because standard deviation grows with volatility, the bands automatically adapt, a narrow 'squeeze' marks low volatility that often precedes a strong move, while price riding a band signals a strong trend.

• ▸Mean reversion: fade moves back toward the middle band in ranges.
• ▸Squeeze breakouts: trade the expansion after the bands pinch tight.
• ▸Trend strength: price hugging the upper/lower band shows a powerful trend.
• ▸Band width: quantify volatility regime changes.

Algovex exposes Bollinger Bands as a node with upper/middle/lower outputs plus band width. Build squeeze-breakout or mean-reversion rules visually, backtest with slippage and commissions modelled, and export the strategy to code.

• ✕Shorting every tag of the upper band, in a strong trend price 'walks the band'. Only fade in ranges.
• ✕Treating a band touch as a signal on its own; it's a stretch, not a trigger.
• ✕Trading the squeeze without waiting for the actual breakout direction.
• ✕Forgetting that wider settings reduce signals while tighter ones add noise.