The Bollinger Bands can be a powerful indicator if the best settings are used appropriately. As the bands are based on standard deviations of price, the upper and lower envelopes expand and contract depending on price action. The middle line through the indicator is the moving average of the security and creates a dynamic support and resistance zone.
Advice for the recommended settings for Bollinger Bands and how to make the most of the indicator is what we’ll explore in this article.
The recommended settings for Bollinger Bands are the default values that other traders and software algorithms use. As many other traders and bots use the Bollinger Bands for making decisions, it’s therefore important that you are also seeing the same chart, so to speak.
In other words, Unless you have significant experience in trading already, then adjusting the bands to some other configuration is not recommended.
The Best Settings for Bollinger Bands
If you are using software such as Trading View then you’ll already be using the recommended setup. The default values for Bollinger Bands are as follows:
- Periods: 20
- Upper band: two standard deviations
- Lower band: two standard deviations
- Source: closing prices
With these settings in mind, you’ll then see what other traders see and can better follow the market. Another thing to keep in mind is that many software programs also use the bands with default settings as part of an algorithm for making trades.
It would be a shame to be whipsawed out of the market by simply not following along with what everyone else is doing, which is why using the default settings for Bollinger Bands is so important.
If you’d like more tips on how you can make the most out of Bollinger Bands for easier and more profitable trades then check out this free guide here.