Bollinger Bandwidth

The Bollinger Bandwidth indicator identifioes situations where the direction of an instrument's prices are about to move. Bollinger Bands form an envelope drawn a number of standard deviations above and below a moving average. Bandwidth measures the percentage difference between the upper and lower bands, giving an indication to its volatility.

Configuration Options

• Field: Price or combination of prices to use as the base for average calculations. Possible values include:
  • Open
  • High
  • Low
  • Close
  • Adjusted Close
  • HL/2 $\left ( \frac{High + Low}{2} \right )$
  • HLC/3 $\left ( \frac{High + Low + Close}{3} \right )$
  • HLCC/4 $\left ( \frac{High + Low + Close + Close}{4} \right )$
  • OHLC/4 $\left ( \frac{Open + High + Low + Close}{4} \right )$
• Period: Number of bars to use in the calculations.
• Standard Deviations: Number of standard deviations above and below the average to draw the bands.
• Moving Average Type: Type of moving average to use in the calculations:
  • Simple
  • Exponential
  • Time Series
  • Triangular
  • Variable
  • VIDYA
  • Weighted
  • Welles Winder
  • Hull
  • Double Exponential
  • Triple Exponential
• Color Selectors: Colors to use for graph elements.
• Display Axis Label: Whether to display the most recent value on the Y axis.

Typically, bandwidth parameters will match the user’s preferred Bollinger Band parameters.

Formula

Bollinger Bandwidth = (Upper Band – Lower Band) / Central Moving Average * 100

$$Bollinger\;Bandwidth = \frac{(Upper\;Band - Lower\;Band)}{Central\;Moving\;Average} \times 100$$