The BB indicator consists of two sidelong bands and a middle line. These three elements indicate how prices more around an average value, which is represented by the middle band. The upper and lower bands expand when market volatility is high, and contract when market volatility is low. They either move away from the middle band (high volatility) or towards it (low volatility).
The Bollinger Bands are among the most used TA indicators, especially in traditional financial markets. However, they are also used by cryptocurrency traders. Still, BB should not be used as a stand-alone tool but rather in conjunction with other TA tools and indicators, to decrease the overall risks.
Other than that, the movement of the upper and lower bands in relation to the middle line is a very important factor of the BB indicator. The expansion and contraction of the bands may come handy when traders and chartists are trying to predict the next periods of market volatility (or lack thereof).
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A measure used in order to assess the efficiency of an investment. The ratio between net profit and net cost.