Bollinger Bands Calculation Example

Assume a 5 bar Bollinger band with 2 Deviations, and assume the last five closes were 25.5, 26.75, 27.0, 26.5, and 27.25.


Calculate the simple moving average:


25.5 + 26.75 + 27.0 + 26.5 + 27.25 = 133.0

133.0 / 5 = 26.6


Next, for each bar, subtract 26.6 from the close and square this value:


25.5 - 26.6 = -1.1 squared = 1.21
26.75 - 26.6 = 0.15 squared = 0.023
27.0 - 26.6 = 0.4 squared = 0.16
26.5 - 26.6 = 0.1 squared = 0.01
27.25 - 26.6 = 0.65 squared = 0.423

Add the above calculated values, divide by 5, and then get the square root of this value to get the deviation value:


1.21 + 0.023 + 0.16 + 0.01 + 0.423 = 1.826

 1.826 / 5 = 0.365

Square root of .365 = 0.604


The upper Bollinger band would be 26.6 + (2 * 0.604) = 27.808


The middle Bollinger band would be 26.6


The lower Bollinger band would be 26.6 - (2 * 0.604) = 25.392