Bollinger Bands

Bollinger bands allow the comparison of volatility and relative price levels over a specified time period. Bollinger bands consist of three lines that are plotted to represent fluctuations within the prices.

The black line represents the price of the fund within the specified time period. The light blue line is a 20 day simple moving average of the stock prices to represent the trend of the price. The upper line and extremity of the grey area shows the simple moving average plus two standard deviations. The lower line and lower extremity of the grey section shows the simple moving average minus two standard deviations.

A standard deviation is defined as a measure of variation away from an average, in this case the 20 day simple moving average. As a point of reference, approximately 68% of measurements fall within one standard deviation and 95% within two.