Bollinger Band Mean-Reversion Entries with Midline Exits
Summary
The document describes a countertrend strategy using Bollinger Bands calculated from a 20-period simple moving average and a two-standard-deviation envelope. It enters long when price crosses back above the lower band and short when price crosses back below the upper band, then closes positions on a return across the middle band. Percentage-based take-profit and stop-loss orders supplement those exits, while position size is set as a share of account equity.
The stated defaults are a 2% take profit and 1% stop loss. Published backtest settings name SOL/USDT futures and a six-hour period, while the overview describes a one-hour strategy; no performance results are provided. The notes identify risks from false reversals, persistent trends, parameter sensitivity, absent volume confirmation, and fixed percentage exits that do not adapt to volatility. Trend filters, volume checks, ATR-based exits, and market-specific testing are suggested, but none is evaluated with evidence here.
Key ideas
- The strategy treats crossings back inside Bollinger Band extremes as mean-reversion entry signals.
- Long and short positions are exited when price crosses the middle band in the opposite direction.
- Take-profit and stop-loss orders use fixed percentages, and position sizing is based on account equity.
- Persistent trends can produce repeated countertrend losses, while fixed exits may not fit changing volatility.
- The document proposes trend and volume filters and ATR-based exits but reports no test results.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.