What is Bollinger Bands?
Bollinger Bands are a volatility envelope: a 20-period simple moving average with a line two standard deviations above it and another two below.
How it works
John Bollinger created them. The bands widen when price is volatile and narrow when it is quiet. Traders read a touch of the upper or lower band as stretched, and a very narrow band, called a squeeze, as a sign that a larger move may follow.
What it can't tell you
Price can walk along a band for a long time in a trend, and a squeeze says a move is possible, not which direction it will go.
How Tickfloor uses it
Bollinger Band position and width are one of the ten inputs to Tickfloor's agreement score.
Does it work as a strategy?
Tickfloor backtested 3 rules that use Bollinger Bands, net of modelled trading costs, against a benchmark of the same assets. None finished ahead of the benchmark on the point estimate, and none cleared the corrected bar (Benjamini-Hochberg q below 0.10). These are specific tested implementations, not every way to use Bollinger Bands, and a historical diagnostic, not validation under Testing Standard v2.
Tickfloor's research desk has backtested 517 strategies, most against an equal-weight benchmark of the same assets rebalanced daily that pays no costs (the strategies pay theirs). After correcting for the 598 tests run (Benjamini-Hochberg), 0 passed. That does not prove no strategy works. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.
Common questions
What is Bollinger Bands?
Bollinger Bands are a volatility envelope: a 20-period simple moving average with a line two standard deviations above it and another two below.
How does Bollinger Bands work?
John Bollinger created them. The bands widen when price is volatile and narrow when it is quiet. Traders read a touch of the upper or lower band as stretched, and a very narrow band, called a squeeze, as a sign that a larger move may follow.
Does Bollinger Bands work as a strategy?
Tickfloor backtested 3 rules that use Bollinger Bands, net of modelled trading costs, against a benchmark of the same assets. None finished ahead of the benchmark on the point estimate, and none cleared the corrected bar (Benjamini-Hochberg q below 0.10). These are specific tested implementations, not every way to use Bollinger Bands, and a historical diagnostic, not validation under Testing Standard v2.
What are the limits of Bollinger Bands?
Price can walk along a band for a long time in a trend, and a squeeze says a move is possible, not which direction it will go.
How does Tickfloor use Bollinger Bands?
Bollinger Band position and width are one of the ten inputs to Tickfloor's agreement score.