How to Trade with Bollinger Bands
Use Bollinger Bands to evaluate volatility, squeezes, trend walking, and mean-reversion setups.
Bollinger Bands place volatility-based envelopes around a moving average. They expand when volatility rises and contract when volatility falls.
Squeeze and Expansion
A squeeze indicates compressed volatility, not direction. Wait for a breakout, close, and preferably structure confirmation before choosing a side.
During a strong trend, price may walk the outer band. Selling every upper-band touch or buying every lower-band touch can be dangerous.
Mean Reversion
Mean-reversion setups work better in established ranges. A rejection outside the band followed by a close back inside can support a return toward the middle band.
Use nearby structure for the stop and target. Band width should be considered together with spread and average movement.
Practical Checklist
- Classify trend or range first.
- Do not predict squeeze direction.
- Confirm closes back inside the band.