Bollinger Band Short Strategy with Staggered Dollar Averaging

Summary

This strategy opens a short when a bar closes above the upper Bollinger Band by a configurable margin. It calculates the bands from a simple moving average and standard deviation, then sizes up to three entries using fixed dollar allocations. If price rises against the position, it adds a second short after a 2% rise from the first entry and a third after a 4% rise from the second. The strategy closes all entries when price reaches a take-profit level below the weighted average entry price.

The script exposes band length, deviation, entry amounts, and take-profit distance as inputs. Its code uses a default take-profit setting of 3%, while the accompanying description refers more generally to profits of 4% to 8%; this inconsistency should be resolved before interpreting results. No backtest performance or asset-specific evidence is provided. The averaging approach can increase exposure as a short moves further into loss, and the displayed code does not define a protective stop. The script also restricts trading to dates from 2026 onward.

Key ideas

• A short signal occurs when the close exceeds the upper Bollinger Band by a configurable percentage.
• The strategy adds short entries as price moves higher against the open position.
• Take profit is calculated below a weighted average of the entry prices.
• The source code sets a 3% take-profit default, while its description mentions a broader 4% to 8% range.
• The document supplies no performance evidence or protective stop rule.

Tags

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