Bollinger Bandwidth Indicator for Automated Trading

The Bollinger Bandwidth indicator measures the distance between the upper and lower Bollinger Bands. When the bands contract, bandwidth falls. When the bands expand, bandwidth rises.

For automated trading, Bollinger Bandwidth is useful when it becomes a rule: for example, testing whether bandwidth is below a defined threshold before allowing a breakout condition, or whether bandwidth is rising after a squeeze.

• Band Width: The distance between the upper and lower Bollinger Bands
• Volatility Contraction: Low bandwidth can define a squeeze condition to test
• Volatility Expansion: Rising bandwidth can define a post-squeeze expansion condition
• Breakout Filter: Bandwidth can be paired with price crossing the upper or lower Bollinger Band
• Automation Use: Thresholds and band crosses should be explicit, measurable rules

Tradeworks indicator source: Bollinger Bandwidth measures the distance between the upper and lower Bollinger Bands. Low values can be used as a volatility-contraction condition before testing breakout rules.

Bollinger Bandwidth strategies should use explicit threshold and crossover rules. Avoid visual-only squeeze descriptions unless they become measurable conditions in the editor.

• Confirm whether the editor exposes Bollinger Bandwidth directly
• Confirm exact upper, middle, and lower Bollinger Band field names
• Use EMA or SMA for trend filtering
• Use RSI for momentum confirmation
• Use ATR for volatility-aware exits
• Backtest squeeze and expansion logic separately before combining filters