Bollinger band mean reversionIntermediate

Buying closes below the lower band and exiting at the middle.

The idea

Bollinger bands sit two standard deviations around a 20-period average. A close below the lower band is statistically stretched, and in calm markets price often returns to the middle.

The rules

Buy when price closes below the lower band.
Exit when price crosses back above the 20 SMA.
Use a stop, for example 2 ATR, because stretched prices can keep stretching.

Variations traders use

Only trading in the direction of a longer trend, or combining with RSI to confirm the extreme.

What testing shows

Mean reversion tends to work better on stock indices than on trending markets. Expect many small wins and some large losses.

What it looks like on a real chart

Picked automatically from the backtest on real data: the latest winner and the latest loser. The numbered circles are the steps of the rules, in order. Losers are part of every strategy.

Winner +1.65RES · 1D · 2026-09-11 · Long

Loser -1RES · 1D · 2026-11-02 · Long

How WickCheck tests it

Buy when price closes below the lower Bollinger band. Exit when price crosses above the 20 SMA. Stop at 2x ATR.

Test it on real data

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Run this test

Full results on 5 markets: Bollinger band mean reversion.

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Education only, not financial advice. Definitions vary between teachers; these are ours, written for clarity.