Bollinger Bands

Bollinger Bands are three lines plotted on a stock chart that show you when a stock might be overbought (too expensive) or oversold (too cheap). The middle line is a 20-day moving average (the stock's average price over the last 20 days), and the upper and lower bands sit two standard deviations away from it—basically measuring how much the price typically bounces around. When a stock price touches or crosses the upper band, some traders see it as a signal to sell; when it hits the lower band, it might signal a buying opportunity. You'll see these bands in most charting tools, and they're popular because they adapt to how volatile a stock is. For example, if TechCorp stock suddenly becomes much more erratic, the bands automatically widen to reflect that increased swings.