What are Bollinger Bands?

2026年4月29日FX基礎

April 28, 2026FX basics

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Contents [ hide ]

• 1. Let’s first understand the basics of Bollinger Bands.
• How are 2 Bollinger Bands constructed?
• Two key points you can learn from 3 Bollinger Bands
  • 3.1 1. Determine the direction of the market using the center line.
  • 3.2 2. Volatility is determined by the expansion and contraction of the bands.
• 4. [Illustrated Image] Movement of Bollinger Bands
• A typical method using 5 Bollinger Bands
• Method 6 ①: Counter-trend trading during a squeeze (however, not recommended)
• Method 7 ②: Trend following in expansion (recommended)
• 8. Combine it with the Dow Theory to increase your winning percentage.
  • 8.1 Reasons for confirming trend confirmation using Dow Theory
  • 8.2 Why they are powerful when combined
• Is the Dow Theory really necessary?
• 10 Points to note when using Bollinger Bands
• 11. Summary: Bollinger Bands are “a tool to visualize market conditions."

Let’s start by understanding the basics of Bollinger Bands.

• Bollinger Bands are an indicator that visualizes market conditions using a “moving average" and “bands that extend above and below it."
• The width of the band indicates the “momentum (volatility) of the market."
• The biggest advantage is that it’s easy for beginners to understand visually.

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How are Bollinger Bands structured?

• In the center is a “20-period moving average."
• Above and below that are lines representing ±1σ, ±2σ, and ±3σ.
• In practice, it is common to only leave the center line + ±2σ and ±3σ.

Bollinger Bands utilize a statistical concept that shows the probability of a price staying within the bands.
Specifically, ±1σ indicates a “68% probability that the price will stay within the bands," but this refers to the “probability of staying within the bands," not the “timing of a retracement."
Therefore, simply using it as a counter-trend trader because the price touched ±2σ is dangerous.

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Two key points you can learn from Bollinger Bands

• Market direction (trend)
• Volatility

1. The direction of the market can be determined by the center line.

• The central line is pointing upwards → Upward trend
• Downward trend → Downtrend
• Sideways movement → Range-bound market

2. Volatility is judged by the expansion and contraction of the bands.

• Squeeze : The band shrinks → Charging energy.
• Expansion : The band widens → The market has started to move.
• Band walk : Price moves along the bands → Strong trend in progress

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[Illustrated Image] Movement of Bollinger Bands

      上バンド（+2σ）
        ／      ＼
     ／            ＼
---●---●---●---●---●--- 中央線（MA20）
     ＼            ／
        ＼      ／
      下バンド（-2σ）

• The band is too narrow → Squeeze
• Wide band → Expansion

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Teacher, I understand that the band expands and contracts, but I can’t picture how to use it…

For now, just remember that “when it contracts, it’s ready to move" and “when it expands, it’s in the middle of moving."
You can worry about the details later.

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Typical methods using Bollinger Bands

Now, let’s look at two methods commonly used in actual trading.

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Method ①: Counter-trend trading during a squeeze (however, not recommended)

• In a range where the bands have narrowed, a touch of the upper band indicates a sell, and a touch of the lower band indicates a buy.
• It works well in the microwave.
• However, you are likely to suffer a huge loss the moment you transition from squeeze to expansion.

This method is the type where “you can win sometimes, but when you lose, you get wiped out all at once."
Beginners tend to use it first, but it’s dangerous in the long run.

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Method ②: Trend following during expansion (recommended)

• Find a squishy toy
• After that, they followed the trend during the initial stages when the band began to gain popularity.
• If you can ride the trend, you can aim for big profits.

However, expansion doesn’t always lead to a trend.
Therefore, it’s important to combine Bollinger Bands with other technical indicators rather than using them alone.

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To increase your winning percentage, combine it with the Dow Theory.

• Uptrend: Highs and lows are rising.
• Downtrend: Highs and lows are getting lower.

Why Dow Theory is used to confirm trends

Bollinger Band expansion alone doesn’t tell us whether a trend has truly begun.
Therefore, we use Dow Theory,

• Are both the highs and lows rising?
• Conversely,
  check if it’s trending downwards.

A powerful reason when combined

• Bollinger Bands → Indicates when the market starts to move.
• Dow Theory → Determines whether a movement is a genuine trend.

When these two factors are present, the basis for entering a trade becomes significantly stronger.

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Is Dow Theory really necessary?

Teacher, is Bollinger Bands not enough?

Bollinger Bands can tell you when a movement is starting, but they don’t tell you whether it’s a genuine trend.
That’s why combining them with Dow Theory makes it easier to avoid false signals.

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Points to note when using Bollinger Bands

• Touching ±2σ = Counter-trend trading is risky.
• Emphasis on the squeeze → expansion flow.
• Combine it with other technical indicators (especially Dow Theory).
• Don’t trade against the trend during a band walk.

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In summary, Bollinger Bands are a tool for visualizing market conditions.

• The expansion and contraction of the bands indicate the momentum of the market.
• Squeezing → Expansion is the most important point.
• Combining it with Dow Theory increases your chances of winning.
• An indicator that is easy for beginners to understand visually.

Bollinger Bands are not just a contrarian trading tool; they are like
a map for understanding market conditions
. Start by displaying them on your chart and observing the band’s movement.