My Day Trading system in a nutshell (Part 4) - Tight Bollinger Bands

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Hello,

Here is the continuation of my Day Trading system exposed.

I suggest to use Bollinger 10, 2, C: Length: 10; Standard deviation: 2; Price: Close.

What is its purpose?
Tight Bollinger Bands indicate a forthcoming “explosiveness” of prices. In other words, the tighter the band gets, the more volatile the prices are going to be.

How does it work?
When there is a significant tightening of the Bollinger Bands, look out for important price movement. How significant should the tightening be? When, for instance, the width of the band has narrowed to less than 50% of prior price amplitude.

How to use it?
A tight Bollinger band tells you that there is potential for a significant price move (i.e. volatility). When there is a tight Bollinger Band, check the MACD “Cross-over” to see the potential direction of a trade. Then look at the other signals to confirm whether there is a good potential for entering that position.

More to come soon so stay tuned!

Take care,

Mark