The Middle Band and
Standard Deviation Bands
Learn the formula for Bollinger Bands' middle, upper and lower bands, verified against standard technical analysis sources.
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This lesson explains the construction of all three Bollinger Bands lines: the middle band and the upper and lower standard deviation bands.
These formulas have been verified against multiple technical analysis education sources, including the indicator's standard default settings.
The Middle Band
The middle band is a simple moving average (SMA, covered in the earlier Moving Averages unit), typically calculated over 20 periods by default. This serves as the central reference point around which the upper and lower bands are constructed.
Standard Deviation: A Brief Explanation
Standard deviation is a statistical measure of how spread out a set of values is relative to their average. In the context of Bollinger Bands, it measures how much recent prices have varied from the middle band's moving average — a higher standard deviation reflects greater price variability (higher volatility), and a lower standard deviation reflects less variability (lower volatility).
The Upper and Lower Bands
The upper band is calculated as: Middle Band + (2 × standard deviation). The lower band is calculated as: Middle Band − (2 × standard deviation). The standard deviation is calculated over the same period as the SMA (typically 20). This standard "2 standard deviation" setting is designed so that, under typical statistical assumptions, roughly 95% of price action is theoretically expected to fall within the upper and lower bands.
Adjustable Settings
While 20-period/2-standard-deviation is the standard default, these settings can be adjusted — for example, some technical analysis education discusses using a 10-period SMA with a 1.5 standard deviation multiplier for shorter-term analysis, or a 50-period SMA with a 2.5 standard deviation multiplier for longer-term analysis, similar to the adjustable period considerations covered in the Moving Averages unit.
🔖 Summary
Bollinger Bands consist of a middle band (typically a 20-period SMA) with an upper band (middle band plus 2 standard deviations) and lower band (middle band minus 2 standard deviations), designed so that roughly 95% of price action theoretically falls within the bands under typical statistical assumptions. These default settings can be adjusted for different timeframes and trading styles, similar to the period adjustments covered in the Moving Averages unit.
Frequently Asked Questions
What is the middle band?
A simple moving average, typically calculated over 20 periods by default.
What is the upper band formula?
Middle Band + (2 × standard deviation), using the same period as the SMA.
What is the lower band formula?
Middle Band − (2 × standard deviation).
Why is 2 standard deviations the standard setting?
This setting is designed so that, under typical statistical assumptions, roughly 95% of price action is theoretically expected to fall within the bands.
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