Bollinger Band and RSI Reversal Strategy with Fixed 1:2 Risk-Reward

Summary

This four-hour strategy combines Bollinger Bands and RSI to identify potential reversals. It enters long when the close falls below the lower band and RSI is below its oversold threshold; it enters short when the close rises above the upper band and RSI is above its overbought threshold. It only opens a trade when flat. The script sets a percentage-based stop and a take-profit distance twice as large, and calculates position size from a stated dollar risk amount and stop distance.

The document provides strategy code and chart visuals for entry, stop, and target levels, but no performance results or supporting backtest evidence. Its title describes it as profitable, while the included material does not substantiate that claim. The code also uses the current close to calculate order levels and does not account for fees, slippage, or differences in instrument contract sizing. The accompanying note mentions adapting it to a 30-minute chart and instruments including the Dow Jones and euro-dollar, but supplies no testing for those markets or settings.

Key ideas

• Long entries require a close below the lower Bollinger Band and RSI below the oversold threshold.
• Short entries require a close above the upper Bollinger Band and RSI above the overbought threshold.
• The stop distance is percentage-based, and the target distance is set at twice the stop distance.
• Position size is calculated from the configured dollar risk and stop distance.
• The document provides no backtest results to verify its profitability claim.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.