I haven't run this piece in a long time. It's from my old webpage on how to adjust a bug:
Using a bug is a real fun part of using Morse Code. Adjusting one properly so that it works right for you and doesn't frustrate the heck out of you is easy; if you take your time and work methodically. Refer to the photo below for reference.
The first thing you do is to back off all the adjusting screws quite a bit. Not all the way; but far enough out so that everything is nowhere near being set. Once that's done you want to adjust the action of the pendulum. Unscrew "A" - this is the pivot point for the pendulum. Slowly tighten it. You'll know you have it adjusted correctly when the pendulum moves from side to side freely with no binding; but, at the same time, you can move the finger pieces up and down with your fingers and feel very little or no play.
The next thing you want to do is to adjust screw "B". Allow the pendulum to hit the damper. Screw in "B" to the point where you can either see or just perceive the pendulum has touched the damper. Stop there and secure the screw with the knurled lock nut. It is important not to move the pendulum too far away from the damper or else you will not be able to reliably stop your "dits".
The next thing you want to do is adjust the left trunnion screw - D. This will control the amount of side to side travel of the pendulum. For smooth code this gap should be very small. I take a piece of ordinary printer paper, fold it in half to double it and adjust the spacing so that the paper will just slip between the point of the screw and the pendulum. This results in a very small amount of side to side travel. The end result is a nice and clean transition between "dits" and "dahs". I do the same thing for the amount of spacing for the "dah" contact at C. I turn that trunnion screw in so that the paper slips in the gap easily with no binding, then I lock the set screw in place to keep the setting.
The next thing you want to do is adjust the "dits" making part of your bug. This is done by adjusting "E". When "E" is adjusted correctly, you should be able to swing the pendulum to make "dits"; and get 10 to 15 "dits" before the pendulum dampens out and comes to a rest.
"F" controls the tension of the "dit" action. I find it best to tension the spring about half way. Hopefully, if you follow this guide and play around a little bit and experiment, you will find the "sweet spot" that will allow you to send really glassy smooth Morse Code.
Sending with a Bug is just as much fun as sending with a keyer and paddles. However, sending with a Bug allows you to add a little personality. Listening to CW sent with a keyer sounds sterile compared to that sent with a Bug.
If you need to slow down the speed of your Bug to a point that's even slower than what you can get with the weight(s) positioned all the way to the end of the pendulum, then clip a clothes pin or a few alligator clips to the end of the pendulum. This will slow down a Bug to an effective speed as low as 13 words per minute or so.
In my opinion, you know that your bug is adjusted properly when you can send characters like X, Y, Q, C, F and L with little effort, and they sound good - or at least recognizable in my case!
Here's a great video that shows you how to do it, also:
72 de Larry W2LJ
QRP - When you care to send the very least!