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Bollinger band test

Do closes outside the bands snap back in this market, or break out? Every band signal in your closes, and what happened next.

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The closes

Oldest first, separated by commas or spaces; the more closes, the more signals to count.
Closes in the middle average; 20 is the standard.
Standard deviations either side of the middle; 2 is the standard.
How many bars after the signal to measure the move.

The record

The last close is inside the bands, at 72% of the way from the lower band to the upper one. Closes outside the bands have tended to keep going here: fading them has done worse than a random entry, so they look more like breakouts.

After a close below
2 times a close ended below the lower band: 5 bars later the close was higher 0% of the time, -1.40% on average that way, and it got back to the middle band within those bars 0% of the time. Any 5-bar stretch in these closes ended higher 59% of the time.
After a close above
8 times a close ended above the upper band: 5 bars later the close was lower 25% of the time, -0.66% on average that way, and it got back to the middle band within those bars 12% of the time. Any 5-bar stretch in these closes ended lower 41% of the time.
Read it with care
A signal counts on the first close outside a band; costs and slippage are left out. 10 finished signals is a small sample. Test more closes, and other markets, before trusting a rate.

The last signals: the move 5 bars later in the snap-back direction, and whether the price got back to the middle band.

BarCloseAfter 5Middle
135 agoAbove upper-0.61%Yes
132 agoAbove upper-1.84%No
128 agoAbove upper-0.20%No
106 agoAbove upper+0.63%No
75 agoAbove upper-0.92%No
56 agoAbove upper-1.27%No
40 agoAbove upper-1.94%No
36 agoAbove upper+0.85%No

Education only, not investment advice. The answer comes from the numbers you typed in, not from your account or the market. Simulated results are hypothetical and have limits: real trading has slippage, gaps, changing results and emotions. Trading leveraged products can lose money quickly, including all of it. Risk warning

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Educational only, not financial advice; trading involves risk.

Outside the band is not a signal by itself

"Sell the upper band, buy the lower band" assumes the price snaps back to the average. In a strong trend the price can walk along a band for weeks, and a close outside it is the start of a move, not the end. Which one your market does depends on the market and the time frame, so this page counts what the band signals in your own closes did next, how often they reached the middle band, and compares that with a random entry.

See the bands themselves with the Bollinger bands calculator, the same test for the RSI with the RSI signal test, check whether the market trends or reverts with the trend or mean reversion test, and size the trade with the position size calculator.

Not advice. Counts on the closes you type; past signals do not promise how the next one will go.

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Baroq never holds your money and never trades for you. Educational only, not financial advice; trading involves risk.

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