What is the best setting for Bollinger Bands?

John Bollinger suggests a setting of 9-12, and for me the best setting is 12. With these settings you will find that in an uptrend, the Upper Bollinger Band points nicely up and prices are constantly touching the Upper Bollinger Band.

What time frame is best for Bollinger Bands?

There’s really no best timeframe out there to use the Bollinger Bands as the concepts I’ve shared can be applied across different timeframes. So it depends on your trading style and approach: If you’re a day trader, then you’ll use the Bollinger Bands on the lower timeframe like the 15-minutes or 5-minutes timeframe.

How accurate are Bollinger Bands?

By default, the Bollinger Bands ® are set to 2.0 Standard deviations which means that, from a statistical perspective, 95% of all the price action happens in between the channels.

What is standard deviation in Bollinger band?

Bollinger Bands are envelopes plotted at a standard deviation level above and below a simple moving average of the price. Because the distance of the bands is based on standard deviation, they adjust to volatility swings in the underlying price. Bollinger Bands use 2 parameters, Period and Standard Deviations, StdDev.

What is the best setting for stochastic?

For OB/OS signals, the Stochastic setting of 14,3,3 works well. The higher the time frame the better, but usually a H4 or a Daily chart is the optimum for day traders and swing traders.

What happens when Bollinger bands widen?

Bollinger Bands widen as price volatility increases and tighten as volatility declines. Wider bands imply a higher standard deviation, meaning that an average price is less likely to be concentrated near the mean. Bollinger Bands are used to create context and structure around price.

Is Bollinger band a leading indicator?

However, Bollinger Bands have a moving average and outer bands that can act as a leading indicator, as they help to identify areas where the price may stall or reverse. That said, the bands can help to identify areas of dynamic support and resistance​​ as the price moves.

What happens when Bollinger Bands widen?

How can you tell a Bollinger Squeeze?

A Squeeze candidate is identified when the bandwidth is at a six-month low value. Breaking above the 50-day moving average (the orange line in the lower volume window) on drops in stock price, suggesting a build-up in selling pressure, volume shows above normal values on downside price moves.

Does Bollinger Band work?

A common approach when using Bollinger Bands® is to identify overbought or oversold market conditions. In range-bound markets, mean reversion strategies can work well, as prices travel between the two bands like a bouncing ball. However, Bollinger Bands® don’t always give accurate buy and sell signals.

What is the best MACD setting for day trading?

When we apply 5,13,1 instead of the standard 12,26,9 settings, we can achieve a visual representation of the MACD patterns. These patterns could be applied to various trading strategies and systems, as an additional filter for taking trade entries. It is argued that the best MACD setting for a MACD pattern is 5,13,1.

What should the Bollinger Bands be on a daily chart?

In many charting software packages the standard settings for the Bollinger Bands are 18-21 for the moving average and 2 for the standard deviation. These settings are great if you are trading on daily or weekly charts, but John Bollinger himself suggests that when DAY TRADING you should shorten the number of bars used for the moving average.

How to use Bollinger Bands for short term trading?

For short term trading I prefer to use a moving average of 12 bars and a standard deviation of 2 for my settings. In many charting software packages the standard settings for the Bollinger Bands are 18-21 for the moving average and 2 for the standard deviation.

Which is the correct formula for Bollinger Band width?

This Bollinger Band width formula is simply (Upper Bollinger Band Value – Lower Bollinger Band Value) / Middle Bollinger Band Value (Simple moving average). The idea, using daily charts, is that when the indicator reaches its lowest level in 6 months, you can expect the volatility to increase.

What does Bollinger Band mean on S & P 500?

According to Bollinger, a close either above the band or below the band is not necessarily a reversal signal, but rather a continuation pattern. Currently, the S&P 500 is at the top of the upper part of the band (see Bollinger Bands applied to the S&P 500® Index chart), which suggests US stocks are overvalued on a short-term basis.