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BOLLINGER BAND WIDTH
Doug Schaff
FX-Strategy
| Characteristic: | Volatility & trend indicator | ||
| Parameter Defaults:���� | MA Period | 20���� | controls the measurement period for the average |
| � | Std Deviation���� | 2 | controls the placement of the bands around the average |
| Plots: | BLG BandWidth | ||
The Bollinger Band Width indicator is a reflection of the fact that Bollinger Bands tend to widen during sharp price adjustments, seen particularly in trends, while during consolidation they tend to move closer together. This is converted into a line that represents such action.
Bollinger Band Width = (Upper Band - Lower Band)/Middle Band
The effect of trending price or consolidating price on the indicator is to force values higher as a trend develops and lower again as price begins to consolidate or move in a choppy action. Note also the ability to use effective trend lines on the indicator to try and identify when a consolidating market is breaking into a trending nature.
