Last Updated on 17 November, 2020 by Samuelsson
Buying Dips With Bollinger
Buying the dip with Bollinger Bands could be a profitable strategy! This edge trades the SPY that tracks the S&P 500, by combining Bollinger Bands with some more filters.
A Closer Look
As can be seen in the infobox above, this edge trades the S&P 500 through the SPY. However, it should work well on other securities that track the same index as well.
With an impressive 86% winning rate and a profit factor of more than 2.5, this edge is a good start on a trading strategy!
Also, the fact that the backtest is carried out on nearly 20 years of data , is an indication that the edge is persistent throughout time, and might also perform well into the future!
The edge is composed of:
- A Tweaked Bollinger Band Filter
- A Second Indicator applied Twice With Different Approaches
- A Market Regime Filter
- An Indicator-Based Exit
How Does It Work?
This edge is of the mean-reverting type. That means that it tries to identify when the price has moved excessively in one direction and is about to turn around. Therefore the criteria are aimed at identifying these types of situations.You need to be a Silver member to have access to this post.
Below the rules of this very edge are defined for you to replicate in your own testing;You need to be a Gold member to have access to this post.