Bollinger Band Width: A Volatility Meter Before It Is a Signal
Posted: Tue Oct 27, 2026 11:26 pm
Bollinger Bands place lines two standard deviations either side of a moving average, so their distance apart is a direct readout of recent price dispersion. Touching the outer band is common and says little by itself, because the bands expand and contract around price. The width, however, carries information that a touch does not.
Band width, often normalised by dividing by the middle line, rises when realised volatility rises and falls when it contracts. Volatility tends to cluster and to alternate between quiet and active phases, so a width near the low end of its own recent range suggests compression is stretched and that a larger move has become more probable. It does not reveal which direction that move will take, and false expansions are common.
Used as a gauge, width helps with practical decisions: whether a fixed pip target is realistic, whether spread consumes too large a share of the expected range, and whether a mean-reversion approach suits current conditions. Comparing width against its own rolling percentile, rather than a fixed number, keeps the reading meaningful across pairs and sessions. The bands then become a volatility meter first, and only secondarily a map of price extremes.
Band width, often normalised by dividing by the middle line, rises when realised volatility rises and falls when it contracts. Volatility tends to cluster and to alternate between quiet and active phases, so a width near the low end of its own recent range suggests compression is stretched and that a larger move has become more probable. It does not reveal which direction that move will take, and false expansions are common.
Used as a gauge, width helps with practical decisions: whether a fixed pip target is realistic, whether spread consumes too large a share of the expected range, and whether a mean-reversion approach suits current conditions. Comparing width against its own rolling percentile, rather than a fixed number, keeps the reading meaningful across pairs and sessions. The bands then become a volatility meter first, and only secondarily a map of price extremes.