Bollinger Band Mean Reversion with Dynamic ATR Stops

Summary

This strategy takes a contrarian approach to Bollinger Bands. It opens a long after a close below the lower band and a short after a close above the upper band, provided there is no open position. The middle band, calculated as a moving average, serves as the intended reversion target. The strategy sizes trades as a percentage of equity and includes a commission assumption in its settings.

Stops are based on the recent swing low or high with an ATR buffer. Both stops and middle-band targets are recalculated on each bar while a trade is open, so the stop can move as recent extremes and volatility change. The source includes alerts and chart markers, but provides no performance results. The declared risk-reward input is not used in the shown exit calculations, and a moving target or stop may change before execution. Band breaks can also persist during strong trends, so the setup alone does not establish that a reversal will follow.

Key ideas

• Closes beyond the outer Bollinger Band trigger contrarian long or short entries when flat.
• The moving-average basis is used as a target for mean reversion.
• Stops use recent swing extremes buffered by average true range and are recalculated during trades.
• The source declares a risk-reward setting but does not use it in the shown exits.
• No backtest evidence is supplied, and persistent trends can work against the reversal premise.

Tags

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