hi there, it says in the video to use narrow bollinger bands – for safety, wouldn't it better to use wider bollinger bands?
also, what does layering mean?
Hi Alex,
Narrow Bollinger bands will ensure more trades in the same duration as one with wider Bollinger bands. This would help in earning scalping profits.
Layering means dividing the capital and the Bollinger bands into n units. Suppose, you have a trading capital of $300,00 and you consider three layers of Bollinger bands. You take the position when spread crosses first layer and invest 1/3rd of the capital. Similarly, when the second layer is crossed, you deploy the next 1/3rd of the capital and will push the last third of our capital when the outermost layer is crossed.
Here you will not wait for spread to revert to the mean but close the position when the spread reaches to the subsequent layer closer to the mean.
The benefit of this method is that you may gain profits from fluctuations away from the mean as well. You need not wait for the spread to revert to the mean to book profits.