What is a 'Price Band'

A price band is a value-setting method in which a seller indicates an upper and lower cost range, between which buyers are able to place bids. The price band's floor and cap provides guidance to the buyers. This type of auction pricing technique is often used with initial public offerings (IPOs).

BREAKING DOWN 'Price Band'

Price bands can also be used in international trade. A country can set an upper and lower price that it will allow a good to be sold at in the market. If the price of an imported good is below the lower price threshold, the country could tax the good until it falls within the price band.

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RELATED FAQS
  1. How can I use Bollinger Bands® to spot options trading opportunities?

    Learn about different strategies using Bollinger Bands, and understand how the Bollinger Band is calculated using standard ... Read Answer >>
  2. What are the main differences between STARC Bands & Bollinger Bands®?

    Learn about the differences between Bollinger Bands and STARC Bands, two similar volatility band indicators used in technical ... Read Answer >>
  3. How do traders use Bollinger Bands® to identify a breakout?

    Learn how traders use Bollinger Bands to identify breakouts. Breakouts are moves in price to new highs. Buying breakouts ... Read Answer >>
  4. How are Bollinger Bands® used in forex trading?

    Use Bollinger Bands in forex trading to identify entry and exit points with ranging trends or to spot increasing volatility ... Read Answer >>
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