For day trading, a good Bollinger Bands setting typically involves a shorter time period for the moving average and a higher number of standard deviations to widen the bands and capture more recent price movements. Here are the recommended settings:
- Shorter Moving Average: Use a shorter moving average, such as a 9- or 12-period simple moving average (SMA) instead of the typical 20-period SMA. This will make the bands more responsive to recent price changes, which is beneficial for day trading1.
- Higher Number of Standard Deviations: Increase the number of standard deviations to 2 or even 3 for greater volatility coverage. This will widen the bands and increase the likelihood of price touching or bouncing off the bands during the day12.
- Adjustability: Customize the settings to suit your trading style and the specific characteristics of the asset you're trading. Not all assets have the same optimal settings, so it's important to experiment and find what works best for each market34.
By using these settings, you can enhance your ability to identify overbought and oversold conditions, which are key entry and exit points in day trading. However, remember that Bollinger Bands are lagging indicators, so they should be used in conjunction with other indicators and market analysis to confirm signals and improve timing5.
7/6/2024 03:59pm
