Construction
Bollinger Bands are a 20-period SMA with upper and lower bands placed ±2 standard deviations away. The bands widen in volatile periods and squeeze in quiet ones.
The wrong way
Buying mechanically at the lower band and selling at the upper band works in ranging markets and catastrophically fails in trends, where price can 'walk the band' for days.
The right way
Use band touches as a confirmation, not a trigger. Pair them with an RSI threshold and a trend filter (e.g. only fade the lower band if the 50-day SMA is flat or rising). The band squeeze itself is a setup — it signals an imminent expansion in volatility, not a direction.
Not financial advice
This lesson is educational material, not personalized advice. Examples and case studies are illustrative. Trading carries real risk of loss — never invest money you cannot afford to lose, and consult a licensed professional for guidance specific to your situation.