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Bollinger band reversion strategyvsSMA breakout (Donchian-style) strategy

Bollinger band reversion strategy: Fade a 2-sigma stretch below the mean and exit when price tags the middle band. Β· SMA breakout (Donchian-style) strategy: Buy a fresh push above the 20-bar mean and trail the winner until it folds.

Mean reversionLong only

Bollinger band reversion strategy

Fade a 2-sigma stretch below the mean and exit when price tags the middle band.

BreakoutLong only

SMA breakout (Donchian-style) strategy

Buy a fresh push above the 20-bar mean and trail the winner until it folds.

Indicators

  • Bollinger Bands (period 20, Οƒ Γ— 2)
  • SMA (period 20)

Timeframes

15m1h4h
1h4h1d

Bias

Long only

Long only

Market fit

Range-bound

Volatility expansion

Entry rules

  • Enter long when close is below the lower Bollinger band β€” a 2Οƒ stretch below the 20-bar mean.
  • Single position; 3-bar cooldown after exit.
  • Enter long when close crosses above the 20-bar SMA.
  • 4-bar cooldown after exit reduces back-to-back whipsaws.

Exit rules

  • Exit when close pushes back above the middle band.
  • Hard 3% stop-loss; 2% trailing stop locks in any reversion gain.
  • Close on a cross back below the SMA.
  • Trailing 5% stop catches deeper retracements before the SMA flips.

Expected behavior

Smooth equity curve in low-volatility regimes with frequent small wins. Sharp drawdowns when a trend extends and price stays pinned below the lower band β€” the strategy expects mean reversion that may not arrive.

Trendy growth in directional regimes punctuated by ugly chop when price oscillates around the SMA. Best paired with a higher-timeframe trend filter to skip the chop.

Complexity

1 ind Β· 2 entry Β· 2 exitBalanced
1 ind Β· 2 entry Β· 2 exitBalanced

Which one is right for you?

Derived from the bias, timeframe and indicator profile of each strategy β€” not a back-test forecast.

When to pick Bollinger band reversion strategy

  • You expect range-bound β€” the thesis is "Fade a 2-sigma stretch below the mean and exit when price tags the middle band."
  • You want a long-only bot on 15m–4h candles with a balanced rule-set.
  • You're comfortable monitoring 1 indicator (Bollinger Bands (period 20, Οƒ Γ— 2)).

Fade a 2-sigma stretch below the mean and exit when price tags the middle band.

When to pick SMA breakout (Donchian-style) strategy

  • You expect volatility expansion β€” the thesis is "Buy a fresh push above the 20-bar mean and trail the winner until it folds."
  • You want a long-only bot on 1h–1d candles with a balanced rule-set.
  • You're comfortable monitoring 1 indicator (SMA (period 20)).

Buy a fresh push above the 20-bar mean and trail the winner until it folds.

Bollinger band reversion strategy

Fade a 2-sigma stretch below the mean and exit when price tags the middle band.

Try Bollinger band reversion strategy in dashboard β†’Read full breakdown β†’

SMA breakout (Donchian-style) strategy

Buy a fresh push above the 20-bar mean and trail the winner until it folds.

Try SMA breakout (Donchian-style) strategy in dashboard β†’Read full breakdown β†’

Related comparisons

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