Strategy Overview
This advanced trading strategy leverages Bollinger Bands (BB) alongside Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) to identify high-probability entry and exit points.
- Buy Signals: Triggered when the price crosses the lower Bollinger Band upward, confirmed by RSI oversold conditions or MACD bullish crossover.
- Sell Signals: Activated when the price crosses the upper Bollinger Band downward, validated by RSI overbought conditions or MACD bearish crossover.
Position Management
- Partial Closure: 50% of the position closes when the price touches the middle band (SMA).
- Full Closure: Remaining position exits upon reaching the opposite band (upper for long trades, lower for short trades).
- Optional Fixed Take Profit: Users can set predefined TP levels (long/short) or utilize trailing stops to protect gains.
Strategy Inputs & Configuration
Bollinger Bands Parameters
| Input | Description |
|-------|-------------|
| BB Source | Price source for Bollinger Bands (e.g., close, open). |
| SMA Length | Length of the simple moving average (default: 20). |
| StdDev Length | Period for standard deviation calculation (default: 2). |
Risk Management
| Input | Description |
|-------|-------------|
| Trail Long/Short Loss (%) | Initial stop-loss distance for buy/sell trades (percentage). |
| Maximum Orders | Cap on simultaneous open positions (e.g., 3 buy + 3 sell). |
| Position Size | Contracts/units per trade. |
RSI Configuration (Optional)
| Input | Description |
|-------|-------------|
| RSI Source | Price source for RSI calculation. |
| RSI Period | Lookback period (default: 14). |
| RSI Buy Value | Threshold for oversold signals (e.g., ≤30). |
| RSI Sell Value | Threshold for overbought signals (e.g., ≥70). |
MACD Configuration (Optional)
| Input | Description |
|-------|-------------|
| MACD Source | Price source for MACD. |
| Fast/Slow Length | EMA periods (e.g., 12/26). |
| Signal Length | Signal line smoothing (e.g., 9). |
| MACD Variation | Toggle for trend-reversal logic (3-candle validation). |
Take Profit Rules
| Input | Description |
|-------|-------------|
| Max TP Long/Short (%) | Fixed TP percentage for buy/sell trades. |
Execution Logic
Signal Validation: Trades execute only when BB, RSI, and MACD (if enabled) align.
Example: A buy requires:
- Price crossing lower BB upward.
- RSI <
RSI Buy Value. - MACD crossing zero upward (or 3-candle downtrend for variation).
- Exit Hierarchy: Priority given to band touches (middle → opposite band) over fixed TP.
FAQs
Q1: Can I use this strategy without RSI or MACD?
A: Yes! Disable Use RSI/Use MACD to trade purely based on Bollinger Bands.
Q2: How does the trailing stop work?
A: The stop-loss dynamically adjusts as the price moves favorably, locking in profits while limiting downside.
Q3: What’s the advantage of MACD variation?
A: It filters false signals by requiring sustained momentum shifts (3-candle confirmation).
Q4: Is this suitable for crypto markets?
A: Absolutely! The strategy adapts well to volatile assets like Bitcoin. 👉 Explore crypto trading tools for optimization.
Key Takeaways
- Combines Bollinger Bands with RSI and MACD for robust signal confirmation.
- Flexible exit strategies (partial/full closes, trailing stops, or fixed TP).
- Customizable inputs to match various trading styles and asset classes.
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Disclaimer: This content is for educational purposes only. Trading involves risk; conduct independent research before applying any strategy.