Bollinger Bands and Average True Range (ATR) both describe volatility, but they answer different questions. Bollinger Bands draw a range around a moving average of closing prices, while ATR reports one number for typical bar size. Asking which "measures volatility better" needs a test, and a test needs an indicator that claims something to score.
Bollinger Bands measure the standard deviation of closing prices around a 20-bar moving average, while ATR averages the true range (the largest of high-low, high-to-prior-close and low-to-prior-close) over 14 bars by default.
Only an indicator that attaches a coverage claim to a range can be scored on coverage, and ATR carries none until a multiple, such as 2×ATR, is chosen and given a stated probability.
Bollinger Bands do carry one, and it has been measured. In the working paper's comparison, a standard (20, 2) price-space Bollinger band covered 82.64% of next closes, against 94.00% for the outer band of the Behavioral Transform Model, versus the ~95% nominal rate. These are historical calibration figures; past behavior is not a guarantee of future results. The method is explained in how to compare band indicators, and the default-settings shortfall in how accurate Bollinger Bands are.
Oisigma has not published an ATR coverage test, so nothing here says how any ATR multiple would score. The same procedure would apply: define the range, count the next closes inside it, compare with the stated rate.
It does not show that either indicator helps a trader. The paper validates the range's calibration, not the profitability of any use, and whether a use delivers value after costs is an open question.
The expected-range band has stated limits too: containment fell to about 65% at crisis onset (VIX above 30), and the outer band is slightly optimistic in the deep tails. ATR serves purposes outside this comparison, such as describing typical bar size.
What is the default ATR period on TradingView?
ATR uses a 14-bar length by default, applied to the true range. The length is an input; changing it alters the smoothing but not the definition of true range itself.
Does ATR account for gaps?
Yes. True range includes the distance from the prior close to the current high or low, so an overnight gap enters ATR directly. Bollinger Bands use closing prices only, so a gap enters at the next close.
Can both be displayed on one chart?
Both can sit on one chart, with ATR plotting in its own pane. Some traders read the two side by side; no published test examines any combination, so this post makes no claim about it.
The method sits in the working paper and the published misses on the Proof page. The Behavioral Transform Model runs on TradingView, with a 30-day free trial.
Oisigma provides descriptive market analytics for educational use. It is not investment advice, does not predict prices, and does not provide buy or sell signals. Statistics referenced are historical and were measured in our working paper (not peer-reviewed); past behavior is not a guarantee of future results. Trading and investing involve substantial risk of loss, including the possible loss of all capital invested. Leveraged products (futures, options, margin) carry additional risk and can result in losses that exceed your initial investment. Bollinger Bands® is a registered trademark of John Bollinger; Oisigma is not affiliated with or endorsed by Mr. Bollinger. RiskMetrics® is a registered trademark of MSCI Inc.; Oisigma is not affiliated with or endorsed by MSCI Inc. Nothing in this article is a recommendation to use any particular strategy. Read the full Disclaimer →
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