Bollinger Band Trailing Stop for Trend Reversals

Summary

This indicator uses Bollinger Bands to track a directional trend and mark reversals. Its band center is a moving average, while the upper and lower levels are set by applying a standard deviation multiplier. The documented settings use a period of 12 and a multiplier of 2.

After price crosses a band, the indicator initializes a trend and places a trailing level on the opposite side. In an uptrend, that level can rise with the lower band; in a downtrend, it can fall with the upper band. A close crossing the trailing level flips the trend and draws an arrow, with dotted segments linking recent reversal points. The document explains the indicator’s construction and provides code, but gives no performance tests or evidence that its signals are profitable. Its behavior depends on the chosen parameters and price data, and the source does not specify a market or timeframe.

Key ideas

• The indicator builds upper and lower Bollinger levels from a moving average and standard deviation.
• A band breakout initializes the trend and the trailing level on the opposite side.
• The trailing level follows the relevant band as the trend continues.
• A price cross through the trailing level reverses the trend and marks the event with an arrow.
• The description provides no performance evaluation or recommended market and timeframe.

Tags

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