Double Bollinger Bands

The Double Bollinger Bands indicator plots two sets of Bollinger Bands with different standard deviation multipliers to help traders identify volatility zones and potential trend exhaustion points.

Usage

The Double Bollinger Bands tool is primarily used to identify market "zones." When the price is trading between the first and second standard deviation bands, it often indicates a strong trend (the "buy zone" or "sell zone"). If the price reaches or exceeds the outer bands (standard deviation 2), it may signify an overextended market or a potential reversal area. Conversely, price action oscillating within the inner bands (standard deviation 1) typically suggests a period of consolidation or low volatility.

Traders can use these zones to:

• Trend Following: Stay in a trade as long as the price remains between the 1st and 2nd deviation bands.
• Mean Reversion: Look for reversals when the price touches or breaks the outer 2nd deviation band.
• Breakouts: Monitor for price moving from the inner "neutral" zone into the outer "trend" zones.

Details

Bollinger Bands are a type of price envelope developed by John Bollinger. They consist of a middle moving average (the basis) and two lines (bands) plotted at a specified number of standard deviations above and below the average.

This specific implementation calculates a single Simple Moving Average (SMA) and a single standard deviation value based on the selected length. It then applies two different multipliers (defaulting to 1.0 and 2.0) to that standard deviation to create the "Double" band effect. This allows for a more granular view of price distribution relative to historical volatility compared to a standard single-band setup.

Settings

• length: The period used to calculate the Simple Moving Average and the standard deviation.
• source: The price data point used for calculations (e.g., Close, Open, High, Low).
• BB1 stdDev: The standard deviation multiplier for the first (inner) set of bands.
• BB2 stdDev: The standard deviation multiplier for the second (outer) set of bands.
• offset: Shifts the bands forward or backward in time on the chart.

FAQ

How do I interpret the different colored zones?

The zones between the basis and the first deviation represent low-volatility areas, while the zones between the first and second deviations represent active trending areas.

Can I change the sensitivity of the bands?

Yes, by adjusting the "length" setting for a smoother or more reactive average, or by changing the "stdDev" multipliers to widen or narrow the bands.

How can I access the Double Bollinger Bands?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.