🌊 Swing · Mean reversion
Trading the Bollinger Bands
Use the 20-period Bollinger Bands as dynamic support/resistance. Buy when price touches the lower band and reverses; sell at the upper band or the middle band. Works best in ranging markets — fails during strong trends where price rides the outer band.
Setup
- Chart: daily or 1-hour candles on a large-cap stock or index
- Plot Bollinger Bands with defaults: 20-period SMA middle band, ±2 standard deviation outer bands
- Confirm range-bound behaviour: no strong directional slope on the middle band over the last 20-30 bars
Entry
Long: price wicks the lower band and closes back above it (rejection). Confirmation is a bullish candle body ≥ 60% of the range. Short: mirror — price wicks the upper band and closes back inside.
Exit
Take profit at the middle band (SMA 20) for a conservative exit, or at the opposite band for a full-range play. Trail behind swing lows/highs if the move extends.
Stop-loss
Just beyond the band that triggered the entry (a few points beyond the wick). Wider than 1×ATR is a signal that BB mean reversion is not the right regime.
When it works
- Range-bound market with no dominant trend on the higher timeframe
- India VIX quiet (12-16) — implied volatility not expanding
- Bounces come from bands with a strong reversal candle (engulfing, pin bar)
When it fails
- Strong trend — price "walks the band", making touching the outer band a continuation signal, not reversal
- Post-event days when volatility expands — bands widen faster than mean reversion can occur
- Very narrow bands (BB Width near multi-month lows) — expect a squeeze breakout, not mean reversion
General trading rules that apply
Regardless of the specific setup, these apply to every strategy on this site:
- Never risk more than 2% of your account on a single trade
- Place a hard stop-loss before entering — no exceptions
- Journal every trade: setup, reason, outcome, one lesson
- After two consecutive losses, stop for the session
- Backtest and paper-trade for a month before deploying real capital
Every strategy here is part of our in-house catalogue, written and calibrated for Indian markets. Past behavior does not guarantee future results. Charts run against 2-year Nifty data — actual results in your account will vary. Backtest, paper-trade, and size responsibly before risking real capital.