Bollinger Bandwidth

How wide the Bollinger Bands are, as a percentage of the price.

What it measures

The distance between the upper and lower Bollinger Band, divided by the middle band.

How traders read it

Traders watch for it to reach a low over recent history, the “squeeze”, as a sign that a quiet spell may end. It says nothing about which way the price will go.

Formula

bandwidth = (upper − lower) / middle × 100
          = 2 × deviations × σ / SMA × 100

Settings and output

Call: bollingerBandwidth(periods, deviations)

Setting	Chart default
`periods`: Periods	20
`deviations`: Deviations	2

What you get: a number.

Warm-up: with bollingerBandwidth(20, 2), it asks for 20 bars of history and a run-up of 1, and its first value came on bar 21 of the example data.

Chart

Bollinger Bandwidth drawn by its own code on example prices

The prices are made up, hourly, and the same on every page, so the chart shows how the indicator behaves, not how a market behaved.

In an algorithm

function onIntervalClose() {
  if (bollingerBandwidth(20, 2) < 0.1) {
    log("Bands are squeezed");
  }
}