Any timescale of the chart can be used with Bollinger Bands, including weekly, daily, and five-minute forecasts. Various trading strategies can be accommodated by the variables. If the instrument's price advances near to the top band, it usually indicates that it has been overbought. In general, traders consider selling whenever they perceive a trading instrument has become overbought. If the price of the instruments is near the bottom band, it indicates that it is oversold. Traders are usually looking for securities that are oversold.

Using Bollinger Bands involves studying price movement, volatility, and the relationship between the market price and its moving average. The indicator usually contains a 20-period simple moving average surrounded by an upper and a lower band. These bands widen when volatility increases and contract when the market becomes quieter. Traders may interpret a price near the upper band as evidence of bullish momentum, while a price near the lower band can suggest bearish pressure. However, these signals must be evaluated within the current trend rather than used as automatic entry instructions. Another common method is to watch for a squeeze, when the bands become unusually narrow. This may indicate that a period of stronger movement is approaching, although the eventual direction is uncertain. Traders can improve confirmation by checking RSI, MACD, support and resistance, or trading volume. Before opening a position, they should assess the potential reward against the risk, establish a stop-loss level, and avoid risking more than their trading plan allows.