📘 Bollinger Bands: A Complete Beginner-to-Expert Breakdown

What are Bollinger Bands?

Bollinger Bands are a powerful technical analysis tool that help you identify volatility, trend strength, and potential buy/sell opportunities in any market.

🧠 The Structure:

Middle Band → Simple Moving Average (SMA)

Upper Band → SMA + (2 × Standard Deviation)

Lower Band → SMA − (2 × Standard Deviation)

They create a “volatility envelope” around price.

🔍 What They Tell You:

✅ When bands are wide → High volatility

✅ When bands are tight → Low volatility (breakout may come)

✅ Price near upper band → Possibly overbought

✅ Price near lower band → Possibly oversold

✅ Price bouncing off bands → Reversal potential

✅ Price riding a band → Strong trend in that direction

📊 How to Calculate (Example):

Given prices: [43, 45, 42, 44, 46]

SMA = 44

σ (Standard Deviation) ≈ 1.41

Upper Band = 44 + 2(1.41) = 46.82

Lower Band = 44 − 2(1.41) = 41.18

⚔️ 3 Powerful Strategies:

Bollinger Bounce → Use in sideways market

Bollinger Squeeze → Look for breakouts

Riding the Bands → Follow strong trends

🚀 Key Takeaway:

Bollinger Bands aren’t magic. But when combined with volume, RSI, or price action, they become a powerful part of your trading system.

💬 Learned and summarized by: Huzaifa Ali – Student of Technical Analysis, Day [1/X]

📅 Daily Learning Journey — Let’s grow together.