$SIREN The daily Bollinger Bands contracted for about 17 days before breaking upward above the upper band (0.0277). Bandwidth was 6.21% during the contraction.
Let’s use this data to break down the Bollinger Bands.
Bandwidth is calculated as (upper band − lower band) ÷ middle band and is used to measure volatility. When bandwidth falls to a low level compared with the recent period, this is known as a squeeze.
Rather than guessing which way the price will break after a squeeze, many people prefer to wait for the price to choose a direction, then manage their risk with a stop-loss.
Indicators can fail, but risk management should never be absent: deciding in advance what to do if you’re wrong matters more than guessing correctly.
Let’s use this data to break down the Bollinger Bands.
Bandwidth is calculated as (upper band − lower band) ÷ middle band and is used to measure volatility. When bandwidth falls to a low level compared with the recent period, this is known as a squeeze.
Rather than guessing which way the price will break after a squeeze, many people prefer to wait for the price to choose a direction, then manage their risk with a stop-loss.
Indicators can fail, but risk management should never be absent: deciding in advance what to do if you’re wrong matters more than guessing correctly.