Created by John Bollinger in the early 1980's to help compare volatility and relative prices in one period of analysis. Bollinger band itself actually consists of three lines forming a boundary belt of price movement. But in practice the midline Bollinger Bands are often not displayed because the midline is just a line used Moving Averages. Consider the following picture:

As has been explained above, Bollinger Bands itself resembles a belt to be limiting price movements. Can you find something in the image above? Yeah right. If there is imbalance between demand and supply, the Bollinger Bands will be more dilated than the balanced condition.

As an example of the image above, place the situation in which supply more than demand that makes the price down from 1.2185 to 1.2071 (114 points), then the belt will be widened bolinger because that rate is rising prices. Compare this with the situation where demand and supply tend to be the same as at 12:00 and afterward. If there is a balance which means the market will move sideways under the Bollinger Bands will be more narrow than usual because it is not as fast as the rate when the price uptrend or down trend.

As volatility indicators, Bollinger Bands really can not stand alone. This indicator is usually used only as an early indicator to measure the relative prices and volatility (volatile = easy to change - volatility = the speed of change). Bollinger Bands indicator is not action, so it is recommended when using this indicator, use other indicators as well before taking a decision to buy or sell.

Mathematical Formulation

As explained above, the Bollinger Bands basically consists of three lines. That arise in our minds of course where these lines were not you? Well, the following explanation: 

 Uper band = Simple Moving Average + (multiplier x standard deviation)
Middle band = Simple Moving Average
Lower band = Simple Moving Average - (factor x standard deviation)
Factor = [0.6174 x ln (period Bollinger Bands)] + 0.1046
For the multiplier factor, typically used numbers than the use of formula 2 above.
Standard deviation is a common statistical calculations used to measure the amount of deviation in each data. The formula is as follows:

by: Xi = the data to the i
X = average

The data that we use in this calculation not only the price closed just as in ordinary high school. In the Bollinger Bands, the data used is a combination of high, low and closinng price. There are two types of data capture during the middle band is using Typical Price, and Weighted Price.

Typical price =

Weighted price = 

But usually the most frequently used is the typical price.

Ok-ok, I know it's boring. But I think you need to know where the Bollinger Bands this number out because at least if you have enough in basic statistics, you will be able to interpret Bollinger Bands better knowing its mathematical character.

Character Bollinger Bands

Each indicator must have a character of each. So does this one indicator. One unique thing is the Bollinger Bands have enabled each person to interpret these indicators with their respective way. Even John Bollinger himself, the creator of this indicator says that the most interesting thing in the analysis using the Bollinger Bands is to consider how each person using it. Although there are some basic rules of Bollinger Bands, but it may be a trader one with the other traders have different ways and use different in using Bollinger Bands. Here are the general characteristics that apply to the Bollinger Bands:
• Bollinger Bands are early indicators that can not be used as an indicator action.Harus diapakai with other indicators. Select one of the best indicators for you as an indicator of action, but do not use indicators more than one action. Some indicators of good action is the RSI, Stochastic, or momentum. It's up to you.
• In general, prices will move in the belt, however, prices may also move outside of the belt. This could mean that will happen just the opposite reversal or strengthening an ongoing trend. To find out we can see the indicators that you are taking action.
• Determination of the period of the Bollinger Bands are also influential here. The smaller the period used the width of the belt will be smaller and vice versa.
If we combine Bollinger Bands with RSI, according to the results:
• If the price is beyond the upper band or the same, while the RSI is still below the overbought zone, then this means there will be a continuation of trends that are happening. Conversely if the area of RSI was overbought and were leaving the area overbought, then this means there will be a reversal of the trend in some candles to the fore.
• If the price is beyond the lower or the same band, while the RSI is still below the oversold zone, so this means there will be a continuation of trends that are happening. Conversely if the area of RSI was oversold and was leaving the area oversold, so this means a reversal of the trend in some candles to the fore

Well, let's see the following picture: 

Notice the circled area and smoothing of RSI. At 1.1932, RSI is a smoothing of 39.9429 and have penetrated the upper price band twice in a row. This indicates that there will be forwarding the trend has just begun. In this price increase, was recorded several times as well through the upper price band but had not yet left the RSI overbought area. This means that the trend will still continue to happen until the left RSI overbought area.
Now compare this with the following image:

 In the circled area smoothing 31.7379 RSI value and lower price band has been through three times with a bullish candle. Thus the expected trend reversal as seen in the next candle. Why I can provide estimates that there will be a trend reversal from bearish to bullish? That's because in addition to my indicator shows price action has left the oversold area and heading into the overbought area.
  
Can be inferred from the use of examples here, actually Bollinger Bands integration with other indicators can we do when we understand the use of other indicators correctly. Use of appropriate indicators will result in decisions that strengthen and support each other so that the benefits obtained. The more we understand the use of indicators of action, the greater the chance we make use Bollinger Bands as an indicator volatilitiy.

Usage Bollinger Bands
Although Bollinger can not be used alone, but there are some indications open Buy / Sell, still we can get through the Bollinger Bands, especially through the middle band. Remember, in the middle band is essentially Simple Moving Average indicator. This means that what applies to the high school also applies to the middle band:
• Middle band is below price, then this indicates a Bullish trend.
• Middle band above harag, indications Bearish trend.
• The intersection between the middle and the price band, the transition trend indication.

 Double bottom buy. This will happen when prices penetrate the lower band twice in a row. The existence of double bottom is an indication of the price increase will occur. But to be sure, needed to confirm the price band through the middle. If you have been through the middle band, it can be expected to occur uptrend which we must open buy position.

 In contrast to the double bottom is a double top buy sell the circumstances in which the price band through the upper and validated with middle band penetration as well. This will mean a decline in the price which we have to open the first position to sell profitable.