Guide
How does the Filtered Bollinger Bands By @Tradingade strategy work ?
The Filtered Bollinger Bands strategy by @Tradingade combines traditional Bollinger Bands with a unique Trend filter designed to identify potential reversal points with higher precision. The Trend filter, being the core component, uses historical data to gauge whether the current price movement is reaching its exhaustion, hence improving entry conditions.
Entries for a long position occur when the price drops below the lower Bollinger Band followed by the close price rising above it. The Trend filter applies an additional condition, requiring yesterday's low to be the lowest of the previous X days. A similar approach is used for short positions, but with the focus on the high price. The strategy presets a stop loss and take profit as percentages, but an important exit condition is also set: a long position exits when the high price breaches the upper band, while a short position exits when the low price dips below the lower band.
The strategy offers flexibility with the "Exit Cond", allowing traders to prioritize either a percentage-based exit strategy or to rely solely on the band crossover condition. Trades are further customizable via input settings, which include the ability to modify the time frame and length of the historical data considered by the Trend filter.