Filters: Bollinger Bands®

Bollinger Bands are calculated using exponential moving averages.

The standard deviation filter is used to confirm other trading signals, and indicates overbought and oversold levels relative to a selected moving average. This is done by comparing values to Bollinger Bands at 1.0 standard deviation above and below the selected moving average. For example:

  • a reading of 250 indicates that closing price is at the 2.5 STD upper band;
  • a reading of zero indicates that closing price is at the moving average; and
  • a reading of -100 indicates that closing price is at the 1.0 STD lower band.

Signals

  • Extremely high readings (eg. Minimum 250) indicate high volatility and possible sell opportunities.
  • Readings above the moving average (eg. Minimum 100) indicate that price is in an up-trend.
  • Extremely low readings (eg. Maximum -250) indicate high volatility and possible buy opportunities.
stock screen bollinger bands standard deviation

To Set the Bollinger Bands filter:

  1. Select the Bollinger Bands filter
  2. Then select the Standard Deviation filter
  3. Set the Day value, using the drop down box
  4. Enter a Minimum or Maximum value
    Minimum = closing price is greater than (or equal to) the value entered
    Maximum = closing price is less than (or equal to) the value entered 
  5. Click the Add button to add the filter.
Colin Twiggs

Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.

He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.