BandWidth

What is BandWidth?

BandWidth is John Bollinger's normalized measure of how wide Bollinger Bands are: upper band minus lower band, divided by the middle band. With default parameters (a 20-period SMA basis and bands two standard deviations away), the numerator spans four standard deviations of price, so BandWidth is relative volatility expressed as a fraction of the average. Dividing by the middle band is what makes readings comparable across instruments and price levels; a raw band span in points is not.

Bollinger defined it to formalize two of his observations. The Squeeze: when BandWidth falls to its lowest level in around six months of daily data (roughly 125 sessions), volatility is unusually compressed, a condition that often precedes the birth of a directional move. The Bulge: extreme high readings mark volatility that is unlikely to be sustained, frequently appearing near trend endings. Both are conditions rather than signals. The Squeeze in particular says nothing about direction, and Bollinger himself documented the head fake, an initial break opposite the eventual move.

How traders use it

• Squeeze scanning: screeners flag instruments whose BandWidth just printed a long-lookback low, building a watchlist of compressed charts before the Bollinger Squeeze resolves.
• Breakout confirmation: after a squeeze, expanding BandWidth alongside a range break supports the move being genuine, while a break on flat width is more suspect; the head-fake risk of a false breakout argues for confirmation over anticipation.
• Trend maturity: width stretched far above its own norm after a sustained advance warns the move is mature; Bollinger tied trend endings to the Bulge, extreme width that tends not to be sustained.
• Normalized comparison: because it is a ratio, BandWidth can be ranked against its own history as a volatility percentile or compared across a watchlist to surface the quietest and loudest charts.

BandWidth vs. related measures