What are Bollinger Bands?
Bollinger Bands are a band drawn around the price. The middle is the average of the last 20 days' prices, and the edges sit two standard deviations above and below it. The band widens when the price swings a lot and narrows when it is calm.
Narrow band: calm days. Wide band: big swings.
How it is calculated
The middle line is the simple average of the last 20 closing prices. The standard deviation measures how far the prices have spread around that average. The edges sit two standard deviations above and below the middle. The method was developed by John Bollinger in the 1980s, and 20 days and two standard deviations are the standard.
How to read it
- The width: a narrow band means the price has been calm, a wide band means big swings. After a long calm spell a bigger move often follows — but the band does not say which way.
- The price at the edge: most closing prices fall inside the band. If the price touches an edge, it is far from its recent normal level.
- The price riding the edge: in a strong rise the price can “walk” along the upper edge for a long time. That is a sign of strength, not of a coming reversal.
What the band cannot do
The band is built from the last 20 days and moves with the price. It cannot tell you what a stock is worth, and it cannot predict when a move starts or ends.
The typical beginner's mistake
Selling because the price touches the upper edge, or buying because it touches the lower one. A price at the edge can keep running along it for weeks.
How you see it in Kiggo
Open a stock and tap “Go deeper into technical analysis”. The “Price history” chart is simple by default. Tap “Show all details” and Kiggo draws the Bollinger Band (20,2) as a light area around the price. Kiggo remembers your choice.
Related terms
Frequently asked questions
What does (20,2) mean?
20 is the number of days in the average, and 2 is the number of standard deviations out to the edges. It is the standard setting.
Is a price above the band a sell signal?
No, not in itself. It means the price has risen unusually much compared with the last 20 days. In a strong rise it can keep sitting at or above the edge.
Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated .
Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.
