Bollinger Bandwidth
Measures the percentage width of Bollinger Bands relative to the middle band; extreme lows signal a volatility squeeze preceding a large move.
Formula
BBW = (Upper Band − Lower Band) / Middle Band × 100
Bollinger Bandwidth quantifies how wide the Bollinger Bands are relative to the 20-period SMA: (Upper − Lower) / Middle × 100. It transforms the visual "squeeze" into a numeric signal.
When Bandwidth falls to a multi-month or multi-year low, a Bollinger Squeeze is confirmed. The lower the Bandwidth, the more compressed the range, and the more explosive the eventual breakout tends to be. Bandwidth alone does not indicate direction — traders typically overlay a breakout rule (e.g. price closes above the upper band after the squeeze) or use a momentum filter to determine which way to trade.
Related Terms
Average True Range (ATR)
Volatility measure averaging the greatest of: current high–low, current high–prior close, or current low–prior close over n periods (default 14).
IntermediateBollinger Bands
Volatility envelope drawn 2 standard deviations above and below a 20-period SMA; bands widen in volatile markets and contract during consolidation.
BeginnerChoppiness Index
Measures whether a market is trending (low values near 38.2) or range-bound / choppy (high values near 61.8) using ATR and the highest-high/lowest-low range.
IntermediateKeltner Channel
Volatility envelope using a 20-period EMA as midline and ATR multiples (typically 2×) as upper and lower bands.
IntermediateStandard Deviation
Statistical measure of price dispersion around a mean; rising values indicate increasing volatility, falling values a tightening range.
Intermediate