In orther to understand the properties of Bollinger Bands, it is best to first understand the characteristics of stock price volatility.

● Time-varying

1.First of all, the volatility of stock prices is not constant over time but changes over time. This is called time variation.

2.It is said that stock prices and volatility have an inverse relationship. This means that when stock prices rise, volatility increases.

3.This is not always the case, but usually when stock prices rise, they rise slowly and when they fall, they fall rapidly. Therefor, a buying position is called a long position, and a selling position is called a short position.

4.In areas whre stock prices are rising, they rise slowly, so volatility is low, and in areas whre stock prices are falling, they are falling rapidly, so volatility is high.

● Swarm castle

1.Cluster means gathered together. This means that once volatility increases, it does not immediately return to the previous volatility, but remains increased for a while.

2.In other words, when a quiet stock price begins to rapidly soar upwardm it soars for a while rather than immediately falling again. The same goes for the bottom.

● Mean reversion

1.Mean reversion refers to the fact that once valatility increases, it does not increase or stay increased forever, but returns to the average volatility.

2.In other words, stock prices fluctuate greatly, but eventually calm down again at some point.

● Applying time variation, clustering, and mean reversion to Bollinger Bands is as follows.

● Bollinger Band contraction and expansion

1.Because time-variability and volatility change, the thickness of the Bollinger Band changes. Also, volatility moves with inertia due to clustering.

2.Due to regression, volatility eventually returns to the long-term average.

3.To sum up, the Bollinger Band repeats contraction and expansion. Once it begins to contract, it continues to contract, and when it begins to expand again, it continues to expand.

4.However, once it begins to contract, it cannot contract inderfinitely, so it expands again, and once it begins to expand, it cannot expand indefinitely, so it contracts again.

5.Bollinger Bands are bands centered around the average, so stock princes mainly move within these bands and move between the top and bottom.