What is %b?
Bollinger Bands %b takes the Bollinger Bands and turns them into a single number. A value of 1 means price is exactly on the upper band, 0 means it is on the lower band and 0.5 means it is on the middle average. Above 1 or below 0 means price has closed outside the bands. Altrady Charts draws dashed levels at 1, 0.5 and 0, with the band between 0 and 1 shaded and the ground above and below shaded in separate colours.
%b shows position relative to the bands. It does not show how wide the bands are, so a reading of 1 in a quiet market and a reading of 1 in a volatile one look the same, and it does not say which way price will go next.
How to use %b
- Above 1 or below 0. Price has closed outside its bands. In a strong move this can repeat bar after bar; on its own it is a sign of a stretched move, not of a reversal.
- Near 0.5. Price is close to its 20-bar average. Crossings of 0.5 show price moving from one half of the band to the other.
- Divergence with price. A new price high with a lower %b reading means the new high sits less far into the band than the last one did, relative to the volatility at the time.
- Combine with band width. Because %b ignores how wide the bands are, it is often read alongside Bollinger BandWidth.
These are ways to read the line, not entry signals on their own.
Settings
| Setting | Default | What it changes |
|---|---|---|
| Length | 20 | Bars in the simple average and the standard deviation that form the bands. Lower reacts sooner and is noisier; higher is smoother. Minimum 1. |
| Source | Close | Which price is measured against the bands, and which price the bands are built from. Open, high, low, hl2 and hlc3 are also available. |
| StdDev | 2 | How many standard deviations each band sits from the average. A higher value widens the bands, so %b leaves the 0 to 1 range less often. Minimum 0.001, maximum 50. |
Adjust the length, source and band width in the indicator settings. The 1, 0.5 and 0 levels are fixed.
Calculation
The bands are built from a simple average and the standard deviation of the same window. %b is price's distance above the lower band, as a share of the distance between the bands:
basis = SMA(close, 20)
dev = 2 * standard deviation(close, 20)
upper = basis + dev
lower = basis - dev
%b = (close - lower) / (upper - lower)With the defaults, the first value appears on the 20th bar, once a full window exists. Because the bands are symmetric around the average, 0.5 always means price equals the average.
If every bar in the window has the same price, the bands have zero width and the division has no answer. The line shows a gap on that bar rather than a spike.
Limitations
- It ignores volatility. %b only says where price sits between the bands, not how far apart they are. A move from 0.5 to 1 can be a tiny price change in a quiet market.
- Outside the bands is not a reversal signal. In a trend, price can ride the upper or lower band, holding %b above 1 or below 0 for many bars.
- It lags. The bands are built from a 20-bar average and deviation, so they adjust to a new volatility regime only gradually.
- The live candle moves. The current bar's value changes until that bar closes.
- It depends on timeframe and settings. Changing the length or the StdDev multiplier changes where 0 and 1 are, so readings are not comparable across settings.
Frequently asked questions
Bollinger Bands %b is an oscillator that shows where price sits relative to its own Bollinger Bands. It reads 1 at the upper band, 0 at the lower band and 0.5 at the middle average, and goes above 1 or below 0 when price closes outside the bands.
Readings above 1 or below 0 mean price has closed outside its bands, which marks a stretched move. Readings around 0.5 mean price is near its average. In a trend %b can stay above 1 or below 0 for many bars, so an extreme reading is context, not a signal to trade against the move.
Yes. The indicator declares three inputs: Length, default 20 with a minimum of 1; Source, default close; and StdDev, default 2, between 0.001 and 50. Open the indicator's settings on the chart to change them.
Values on bars that have already closed are not revised. The current candle's %b moves while that candle is still live and settles when it closes. Each value uses only a fixed window of past bars, so loading older history does not change it.
If every bar in the window has exactly the same price, the bands have zero width and %b cannot be calculated. The indicator leaves a gap on those bars rather than plotting a misleading value. This is rare outside illiquid markets.
Use the Add to chart button at the top of this page. It opens BTC/USDT on Binance in the Altrady Charts terminal with the built-in Bollinger Bands %b already applied. On any other market, open the indicator picker on the chart and choose Bollinger Bands %b from the Oscillator group.