Bollinger Bands

A margin around the price of an asset that helps indicate its volatility. Bollinger bands use two bands, one above and the other below the moving average. These two bands represent the standard deviation of an asset's price from the moving average during a specified timescale. The standard deviation represents how far from the moving average of each data point. In trading, this equates to volatility: the larger the distance between bands the more significant the volatility.

 

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