Bollinger Bands Reversal

Concept

Bollinger Bands consist of a moving average (middle band) and two standard deviations (upper and lower bands). Together, they form a volatility envelope around the price. When prices move outside of this range, it often indicates overbought or oversold conditions.

Idea

This approach assumes that after extreme moves, prices tend to revert back toward the mean. A long entry is considered when a candle closes below the lower band (with confirmation from a recent middle-band crossover), while short entries are considered when price closes above the upper band with the opposite confirmation.

Genetic Algorithm Parameters

• Bollinger Band period length
• Standard deviation multiplier
• Type of moving average (SMA/EMA)
• Middle-band crossover window

Best suited for

Works well in volatile markets, where prices frequently expand outside of normal ranges Less effective in flat sideways markets without strong price swings