Bollinger Bands Breakout Strategy

Bollinger Bands Breakout Strategy is the strategy version of Bollinger Bands Filter study version, which can be found under my scripts page. The strategy goes long when price closes above the upper band and goes short signal when price closes below the lower band.

Bollinger Bands is a classic indicator that uses a simple moving average of 20 periods, along with plots of upper and lower bands that are 2 standard deviations away from the basis line. These bands help visualize price volatility and trend based on where the price is, in relation to the bands.

The strategy doesn't take into account any other parameters such as Volume / RSI / Fundamentals etc, so user must use discretion based on confirmations from another indicator or based on fundamentals. The strategy results are based on purely long and short trades and doesn't take into account any user defined targets or stop losses.

The strategy works great when the price closes above/below upper/lower bands with continuation on next bar. It is definitely useful to have this strategy or the Bollinger Bands filter along with other indicators to get early glimpse of breach/fail of bands on candle close during BB squeeze or based on volatility .

This can be used on Heikin Ashi candles for spotting trends, but HA candles are not recommended for trade entries as they don't reflect true price of the asset.

The strategy settings default is 55 SMA and 1 standard deviation for Bollinger Bands filter, but these can be changed from settings.

It is definitely worth reading the 22 rules of Bollinger Bands written by John Bollinger if interested in trading Bollinger Bands successfully.
Release Notes: Code updated
Release Notes: Code updated to include close longs and shorts.
Release Notes: Code updated - Raw Buy/Sell Strategy results based on 100% equity used with no SL/TP taken into account - commission not included. Users to test extensively before trading the strategy.
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awesome one. i like ichi n bollinger. thanks lot. gonna use this.
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How could I make a change to your script to exit the trade with the hilo indicator reversal?
@FranSkaf, Could you elaborate?
FranSkaf TradeChartist
@TradeChartist, Of course! a friend is in a bot company that operates in the national market (brasil, ibov), and some of them run for several years and are profitable. The strategy is to enter long when the price closes above the bb and short when it closes below the band. The deal is closed when there is a reversal in the hilo indicator.
As of now the Buy & Hold return is 193% over the back-test period, while the Net Profit from the strategy is 306%, which did not include trading fees. Can you add typical trading fees into the code of 0.075% so the Net profit is more accurate.
@AlgoPhi, I left it blank as the fees is different for different asset type and platforms used. I used BTC just as an example for publishing as a TV user requested the strategy version of the Bollinger Bands filter.
AlgoPhi TradeChartist
@TradeChartist, Hi, thanks, nice work. I saw I could enter the trading fees under Properties. FYI, my account lets me back test only from 2019-01-05, using 0.075% for BTC it shows the net profit is 183.49%.
+3 Reply
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