Bollinger bands are important in every charting system. This indicator is used to measure a market's volatility. With the Bollinger bands, the highness or lowness of the price relative to previous trades can be measured. If applied properly these bands are some of the most useful,. However, they are also among the least understood.

Bollinger Bands are a technical analysis tool invented by John Bollinger in the 1980s. Having evolved from the concept of trading bands, Bollinger Bands can be used to measure the highness or lowness of the price relative to previous trades.

Bollinger Band was named after its founder John Bollinger. Just like most traders, he started out doing something else. His passion in lighting and photography brought him to New York and eventually to La-La Land in Hollywood.

Eventually, his interest in stocks sprang out of him when his mother asked him to check her retirement portfolio. Soon enough he began trading and was hired to help set up Financial News Network in Los Angeles in 1983. For many years, he was the Chief Market Analyst for FNN (which was bought later by CNBC). John became publicly known through his market analysis and commentary on television.

Though you would think that Mr. Bollinger reached the top point of his career, he believed that it was still not good enough. "It's very important to continuously expand your knowledge and skills," Bollinger said. And that's what he did exactly.

He became an avid researcher and developed a number of widely used investment tools and analytical techniques. Voila! Came the Bollinger Bands which made him popular all over the world. As we all know, Bollinger Bands are used to measure a market's volatility. His book, Bollinger on Bollinger Bands has been translated into several languages and has helped countless traders. He is also a Chartered Financial Analyst (CFA) and a Chartered Market Technician (CMT).

As of right now, John remains as the president of Bollinger Capital Management which he also founded in 1990. At this point, he decided to become his own boss and perhaps, it was the best decision he ever made (and highly recommends it to everyone).

As seen on this chart, the upper or lower band is pierced multiple times during a trend. This is what we call Walking the Bands. When one band is pierced, price has a tendency to move to the other band. Most people think that when a candle pierces a band, it signals a change in price automatically. That's a big mistake. This usually happens after that section or wave of the trend is done. But other conditions must apply. Remember that the use of Bollinger Bands must be in context with other indicators such as Moving Averages or the Elliott Wave pattern.

When the bands "squeeze" together, it usually means that a breakout is going to happen. The strong movement of price (can either be up or down) leads to falling apart of the bands. Usually, low volatility leads to high volatility and when the opposite band turns back towards the center, it means that the movement is over.