Bollinger Bands — what it is and how to use it in trading
Definition
Bollinger Bands are three lines around price: a middle line (a plain SMA) and upper/lower bands set dev standard deviations of price away from it. The bands automatically widen and narrow together with volatility.
How it works in the builder
bbands_upper/bbands_middle/bbands_lower take period and dev parameters (default 20 and 2). The builder also offers bbands_pctb (price's position inside the bands, from 0 to 1) and bbands_width (a numeric measure of band width as a volatility indicator).
What it looks like on the chart
The three lines are drawn directly on the price chart — price usually oscillates between the upper and lower bands, rarely and only briefly moving outside them.
Typical use
Touching the upper band is often read as overbought or a strong momentum push, the lower band as oversold. Typical condition: close > bbands_upper(20, 2) — price closed above the upper band; a narrowing of the bands often precedes a sharp move.
Common pitfalls
In a strong trend price can "walk along" the upper or lower band for many bars without reversing — a simple touch of the band isn't a signal by itself, only context. The bands are built on an SMA, so they lag on sharp reversals just as the moving average itself does.
This block is available in the strategy builder
137 no-code blocks — build an entry condition with this term and test it on history
Historical results do not guarantee future ones. The service is an informational and analytical tool, not an individual investment recommendation; trades are not executed.
Bollinger Upper
Block variants
BB Middle
Bollinger Lower
BB %B
BB Width