Click to learn more. The indicator consists of three bands designed to encompass the majority of a security's price action.
Standard deviation is a statistical term that provides a good indication of volatility.
Using the standard deviation ensures that the bands will react quickly to price movements and reflect periods of high and low volatility. The centerline is the 20-day simple moving average. The upper band is the 20-day simple moving average plus 2 standard deviations. The lower band is the 20-day simple moving average less 2 standard deviations. Settings Closing prices are most often used to compute Bollinger Bands.