Bollinger Band (Bottom, Variable Length) [BBBotVL]

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The Bollinger Band (Bottom, Variable Length) function calculates the lower band of a variable length moving average envelope for a field, using the standard deviation of the field for the width of the envelope. Parameters ------------------ Data          The data to use in the average. This is typically a field in a data series or a calculated value. Period        The number of bars of data to include in the average, including the current value.                   For example, a period of 3 includes the current value and the two previous values.                   A period of 20 is recommended, while periods less than 10 may be significantly less useful. Maximum Period   The maximum value that Period can contain.                              Larger values require extra memory to be set aside for this function to be calculated. Deviations        The number of standard deviations to include in the envelope.                          A width of 2 is recommended. Note that non-integer and variable widths can be used. Indicator Value ------------------------ Bollinger Bands are a pair of values placed as an "envelope" around a data field. The values are calculated by taking the moving average of the data for the given period and adding or subtracting the specified number of standard deviations for the same period from the moving average. Since Bollinger Bands use a moving average, the value at the beginning of a data series is not defined until there are enough values to fill the given period. Usage ----------- Bollinger Bands are useful for determining whether current values of a data field are behaving normally or breaking out in a new direction. For example, when the closing price of a security increases above its upper Bollinger Band, it will typically increase in that direction. Bollinger Bands can also be used for identifying when trend reversals may occur. New highs or lows outside of the bands followed by another high/low inside of the bands typically indicates a reveral in the current trend. Since the standard deviation can be used as a volatility indicator, the current width of the envelope can also be used for trend information. A wide envelope indicates a high amount of volatility, while a narrow envelope indicates a lower amount. High volatility levels can sometimes be used to time trend reversals, such as market tops and bottoms. Low volatility levels can sometimes be used to time the beginning of new upward price trends following periods of consolidation. Another observable trait of Bollinger Bands is that moves that begin at one band tend to go all the way to the other band. This can be useful for forecasting future values. Bollinger Bands are similar to Trading Bands and share many of their characteristics. However, unlike Bollinger Bands, Trading Bands do not vary in width based on volatility. Source ------------ This indicator is based on an entry in "Technical Analysis From A To Z" by Steven B. Achelis. It was originally developed by John Bollinger.