Bollinger Band Mean Reversion with Stops and Profit Targets

Summary

This document outlines a mean-reversion strategy using Bollinger Bands. It describes a 20-period simple moving average as the center line and bands two standard deviations away. A move below the lower band triggers a long entry, while a move above the upper band triggers a short; the strategy exits as price returns through the center line. It also specifies percentage-based stop-loss and profit-target levels, alongside an account-equity sizing description.

The source includes a brief BTC futures backtest configuration, but the document reports no performance statistics, so it does not establish whether the rules are profitable. Its narrative recommends trend filters, breakout confirmation, and drawdown limits as possible safeguards. There is also a discrepancy between the stated 1% allocation per trade and the source strategy’s 200% of equity order sizing, so the actual exposure is unclear. The stated band-crossing logic and stop/target implementation should be checked before use.

Key ideas

• The strategy enters long below the lower Bollinger Band and short above the upper band.
• The center moving average provides a mean-reversion exit signal.
• Fixed percentage stops and profit targets are intended to constrain trade risk.
• The document proposes trend and signal filters to reduce false entries in ranging or unstable markets.
• The source’s position sizing conflicts with the narrative, and no performance results are supplied.

Tags

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