Bollinger Bands

Bollinger Bands, a technical indicator developed by John Bollinger, are used to measure a market’s volatility and identify “overbought” or “oversold” conditions. Basically, this little tool tells us whether the market is quiet or whether the market is LOUD! When the market is quiet, the bands contract, and when the market is LOUD, the bands expand. The upper and lower bands measure volatility, or the degree of the variation of prices over time. Because Bollinger Bands measures volatility, the bands adjust automatically to changing market conditions. That’s all there is to it.