Three lines are drawn onto a price chart to calculate Bollinger bands. Within a 20-day period, the first line represents the SMA of an asset's price. SMA plus two standard deviations is the upper band, and SMA minus two standard deviations is the lower band.

The SMA can be calculated by taking the closing prices for the number of days you are looking at, usually 20 days, and dividing the total sum by the number of days.

You can calculate the upper and lower bands once you have the SMA:
The upper band = 20-day simple moving average plus (20-day standard deviation multiplied by 2)
The lower band = 20-day simple moving average minus (20-day standard deviation multiplied by 2)

It is useful for a trader to know what Bollinger bands mean and what can be learned from them, even though most trading platforms will calculate them for you automatically.

Bollinger Bands are a popular technical analysis tool used to analyze the volatility and potential price movements of a financial asset. To calculate Bollinger Bands, follow these steps:

1. Calculate the Moving Average: Choose a time period (commonly 20 days) and calculate the simple moving average (SMA) of the asset's closing prices over that period.

2. Calculate Standard Deviation: Calculate the standard deviation of the closing prices over the same period used for the SMA.

3. Upper Band: Add two times the standard deviation to the SMA to determine the upper band.

4. Lower Band: Subtract two times the standard deviation from the SMA to determine the lower band.

Bollinger Bands are typically plotted on a price chart, with the SMA in the middle and the upper and lower bands above and below it, respectively. These bands widen during periods of high volatility and narrow during periods of low volatility, providing traders with insights into potential price breakouts or reversals.