Simple Bollinger Bands and RSI trading strategy

Strategy template description

This strategy works great in an uptrend. It identifies the places where the price hits lower support given by Bollinger Bands Lower line and RSI and it enters the market.

Then the strategy will exit when the price goes back to the mean identified by the Bollinger Bands Middle line.

Step 1: Login and click on Create Strategy

Once you're logged in to the Vestinda app, click on Create Strategy from the left menu.

Step 2: Use a strategy Template

Click on Use a Strategy Template from the overlay.

Step 3: Learn how the strategy works 

Once you reach the template page, you have the entire strategy code ready to be used. 

You can see the parameters for each indicator, but also modify the timeframe and all parameters. 

Step 4: Backtest strategy or Demo Trade

Before any execution, backtesting the strategy is the best place to start from. You can do it on thousands of assets and many years of historical data. 

This is helping you learn how to use these indicators, in what market conditions they work best, and what assets to trade using this strategy and indicators. Read more about Backtesting.

Demo Trading is another way to simulate the strategy without risking real money. This allows you to start using the strategy on the market moving forward on any available asset. Read more about Demo Trading.

Step 5: Results

This is the result of backtesting this template on BTCUSDT on a 6 months period from Aug 2022 to Feb 2023. 

With a simple strategy like this, we got an outcome that returned better than the benchmark. Profitability is not great, but adding more filters to the entries can help

Once you're confident enough, you can start Real Trading.

Indicators in the strategy

Bollinger Bands

Bollinger Bands Lower

Bollinger Bands Lower is one of two lines in the Bollinger Bands technical analysis indicator. It is a line plotted two standard deviations below a simple moving average of the price. The Bollinger Bands Lower line is used in conjunction with the Bollinger Bands Upper line to form a volatility channel around the price. The two lines help traders identify potential overbought and oversold levels, as well as changes in volatility.

Bollinger Bands Middle

Bollinger Bands Middle is the simple moving average (SMA) line at the center of the Bollinger Bands technical analysis indicator. The SMA line is used as the basis for the calculation of the Bollinger Bands Upper and Bollinger Bands Lower lines, which are plotted two standard deviations away from the SMA line. The Bollinger Bands Middle line is a measure of the average price of the security being analyzed and helps traders to identify trends and potential breakouts.

RSI (Relative Strength Index)

The Relative Strength Index (RSI) is a popular momentum oscillator used in technical analysis. It measures the strength of a security's price action by comparing the magnitude of its recent gains to the magnitude of its recent losses and normalizing the result into an index value that ranges from 0 to 100.

RSI is often used to identify overbought and oversold conditions in an asset, as well as potential trend reversals. Values above 70 are considered overbought, while values below 30 are considered oversold. A bullish reversal is indicated when the RSI value crosses above 50, while a bearish reversal is indicated when it crosses below 50.

Congrats! 🎉

Check out the following video for more on how to use Bollinger Bands with Vestinda.