Bollinger Band Reversal Signals with Wick Ratios and Fixed Risk Sizing

Summary

This strategy searches for potential reversals when daily candles extend beyond Bollinger Bands and have a sufficiently large wick relative to the candle body. A lower-band breach with a qualifying lower wick sets up a long entry; an upper-band breach with a qualifying upper wick sets up a short. Entry timing can be selected from the daily close, open, high, or low, and unfilled entry levels expire after a short window. Swing pivots provide stop levels, while the script sizes trades against a stated fixed account-risk amount and aims to exit at the opposite band.

The supplied defaults include a 20-period band and a two-standard-deviation width, with a minimum wick-to-body ratio of one. Published settings use BTC/USDT futures on a 12-hour chart, while the signal calculations request daily data. No performance results are reported. The narrative describes one-percent account risk, but the code hard-codes the account balance and risk percentage; wick ratios can also be unstable when candle bodies are very small. The method therefore needs careful implementation and testing, particularly for order fills, sizing, and stop behavior.

Key ideas

• The setup treats band breaches with sufficiently long candle wicks as possible reversal signals.
• Daily candle data drives the signal even though the published chart period is 12 hours.
• Swing pivots define stop levels, and trade quantity is calculated from a fixed risk amount.
• Entry timing is configurable, and pending entries have an expiration condition.
• No backtest outcomes are provided, and the account balance and risk percentage are fixed in the code.

Tags

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