This approach fades price extremes beyond the Bollinger Bands using the Percent B indicator. Moves above the upper band or below the lower band suggest overextension.
When percent B is less than zero or greater than one, the system bets on a return to the middle of the band. An exit threshold closes trades once momentum normalizes.
Stops are placed at a fixed percentage from entry.
- Entry Criteria: Percent B outside the 0–1 range.
- Long/Short: Both directions.
- Exit Criteria: Percent B crosses ExitValue or stop.
- Stops: Yes.
- Default Values:
- BollingerPeriod = 20
- BollingerDeviation = 2.0m
- ExitValue = 0.5m
- StopLossPercent = 2.0m
- CandleType = TimeSpan.FromMinutes(5)
- Filters:
- Category: Mean Reversion
- Direction: Both
- Indicators: Bollinger Bands
- Stops: Yes
- Complexity: Basic
- Timeframe: Intraday
- Seasonality: No
- Neural Networks: No
- Divergence: No
- Risk Level: Medium