Reference Volume-Weighted Average
The first deviation captures roughly 68% of expected action. The second covers 95% and third over 99%. Price reaching the third band is a rare, extreme event.
Filter Direction with VWAP Position
Sustained trading above the first upper band confirms strong bullish momentum. Price is consistently above average and staying extended.
Fade Extremes at Outer Bands
When price reaches the second or third deviation band, mean-reversion traders look for a snapback toward VWAP. Bands widen during volatile sessions automatically.
What does it mean when price reaches the third standard deviation band?
Statistically, price reaching the third deviation band occurs less than 1% of the time during normal sessions. This extreme extension suggests either exceptional momentum that may continue or an unsustainable move due for sharp mean reversion.
Do the bands automatically adjust for different volatility conditions?
Yes. The bands are calculated from actual price variance around VWAP, so they widen during volatile sessions and narrow during calm ones. This automatic adjustment makes them more reliable than fixed-distance envelopes that ignore current conditions.
Should I buy when price touches the lower band?
Not automatically. In strong downtrends, price can ride the lower band for extended periods. Look for additional confirmation like a reversal candle or a shift in momentum before entering. Band touches indicate statistical extremes but not guaranteed reversals.
⭐️
⭐️
⭐️
⭐️
⭐️
✍️
By Author
More by benten
🔥
New Listings
Featured this week
🤖
Similar Listings
Traders also viewed
All
🤖
by deusmecanicus
Free
ThinkOrSwim Indicator
SqueezeMetrics Dark Pools Indicator For ThinkOrSwim
🔑
✅
SqueezeMetrics Dark Pools Indicator for ThinkorSwim is a free indicator that uses the Dark Index (DIX) for generating long and short signals, based on statistical analysis and backtested data.
🤖
by markos
Free
ThinkOrSwim Indicator
Sector Rotation Indicator For ThinkOrSwim
🔑
🌐
✅
Sector Rotation is a ThinkorSwim indicator that visually analyzes shifting investment allocations between sectors, revealing outperforming and underperforming themes.
🤖
by benten
Free
ThinkOrSwim Indicator
VWAP Crosses, Format, Watchlist, Label, Scan For ThinkOrSwim
🔑
🌐
✅
VWAP Crosses is a free ThinkorSwim indicator that shows whether stocks in included in a watchlist are trading above or below the Volume Weighted Average Price.
🤖
by dunpeal
Free
ThinkOrSwim Indicator
Squeeze Watchlist Column - Histrogram Colors, For ThinkOrSwim
🔑
🌐
Squeeze Watchlist Column is a free ThinkOrSwim indicator that visualizes market squeeze events with histogram colors, counts amount of squeezes, tracks their timing across different timeframes and organizes watchlist metrics numerically for easy monitoring.
🤖
by benten
Free
ThinkOrSwim Indicator
FlowAlgo Dark pool and Option Flow For ThinkOrSwim
🔑
🌐
✅
🏅
FlowAlgo Dark pool and Option Flow for ThinkorSwim is a ThinkOrSwim indicator that visualizes dark pool and option trading activities using manual, hardcoded data.
🤖
by halcyonguy
Free
ThinkOrSwim Indicator
Expected Move, Probability Cone For ThinkOrSwim
🔑
🌐
Expected Move, Probability Cone For ThinkOrSwim is an Indicator that calculates expected market moves using price, implied volatility and days to expiratio. Visually displayed using a probability cone.
🤖
by theelderwand
Free
ThinkOrSwim Indicator
Unusual Option Activity Scanner For ThinkOrSwim
🔑
🌐
✅
Unusual Option Activity Scanner for ThinkorSwim is an Indicator that scans option contracts with volumes of 10,000 or more to identify unusual activity. Fine-tune settings according to your needs.
🤖
by camelotnite
Free
ThinkOrSwim Indicator
Implied Volatility (IV) Rank & Percentile For ThinkOrSwim
🔑
🌐
✅
Implied Volatility (IV) Rank & Percentile for ThinkOrSwim displays implied volatility (IV) rank and percentile for options, providing insights into how options are priced in a market.
🤖
by tradecombine
Free
ThinkOrSwim Indicator
JBoyd_TDA Seasons Column For ThinkOrSwim
🔑
🌐
JBoyd_TDA Seasons Column For ThinkOrSwim displays market trend states using seasonal terms like winter and summer, enabling a quick an intuitive read for different trending states and their magnitude.