Bollinger Bands look like they should be easy to read, and that ease is exactly the trap. The construction is plain enough: a moving average runs down the middle of the chart, flanked above and below by two bands set a certain distance away, calculated from the standard deviation of price over that same window. Standard deviation rises when price starts swinging harder and falls when things quiet down, so the bands breathe in and out with the market's own mood. Most people using the indicator miss this. They look at the bands and see a boundary for where price "should" be, when in fact the bands are describing something else entirely: how rough the ride has gotten lately, not where the destination lies.
That confusion produces a specific and costly habit. Price does spend the bulk of its time inside the bands, so it's tempting to read a tag of the upper band as an overbought sell signal and a tag of the lower band as an oversold buy, on the theory that an extreme has been reached and a snap back to the centre is due. In a quiet, sideways market that reasoning sometimes pays off, because price wandering around a stable average really does tend to drift back from the fringes. Try the same trick in a strong trend, though, and it will bleed you slowly. During a real advance, price can hug the upper band for weeks, what traders call walking the band, and selling every touch just means selling into strength again and again while the trend leaves you behind.
The actual signal worth reading isn't where price touches the band. It's how wide the bands themselves are. When they pinch down to an unusually tight range, that's the market telling you it has gone quiet, volatility has been squeezed out, and pressure is building somewhere underneath the calm. Quiet spells like that almost never last. They tend to break into a sudden burst of volatility once a new move gets underway. Traders call this setup the squeeze, and it's worth being honest about what it does and doesn't tell you: it says nothing about which direction the break will take, only that a bigger move is getting more likely by the day. The bands flag that the spring is being wound; they take no side on which way it will snap.
Used properly, Bollinger Bands describe a volatility regime rather than issue buy and sell orders. A tightening band is a cue to stay alert and stop assuming the calm will hold. A sudden widening confirms that things have turned volatile and that the risk profile of any position has just shifted underneath you. Where price sits relative to the bands only really means something once you fold in the underlying trend: a touch of the upper band during a genuine uptrend is a sign of strength, while an identical touch in a market going nowhere is more likely a stretched extreme with nothing behind it. The bands sharpen a picture that's already on the chart. They were never meant to draw it from scratch.
What the bands are really tracking is volatility as its own variable, separate from direction and separate from price level. Markets swing between compression and expansion, calm stretches and rough ones, and that rhythm changes how much risk any given position is actually carrying at a given moment, even when the price itself hasn't moved an inch. Read that way, the bands tell you when a market has gone quiet enough to lull people to sleep and when it has turned violent enough to deserve real caution. That's worth far more than the tired promise of buying every dip to the lower line, a rule that works right up until the trend that finally breaks it.