A Bollinger Band is a technical analysis tool defined by a set of trendlines. They are plotted as two standard deviations, both positively and negatively, away from a simple moving average of a security's price and can be adjusted to user preferences.
Bollinger Bands was developed by technical trader John Bollinger and designed to give investors a higher probability of identifying when an asset is oversold or overbought.
The first step in calculating Bollinger Bands is to compute the simple moving average of the security, typically using a 20-day SMA.
A 20-day SMA averages the closing prices for the first 20 days as the first data point.