The Bollinger Band Crossover Strategy Analysis Template creates a chart displaying a trading strategy that tries to catch market bottoms by going long on dramatic price decreases and then selling when upward price momentum weakens. The Bollinger Band Low Breakout indicator is used to determine dramatic price decreases, while the Price Low indicator is used to determine weakening price momentum.

The Bollinger Band Low indicator provides a price band whose width varies with price volatility (standard deviation). Movement of price below this band is an indication of a dramatic price decrease. The sensitivity of this indicator varies widely depending upon the user’s choice of moving average and standard deviation multiplier.

The Bollinger Band Crossover Trading Strategy enters a long position using a market order when the price moves below the Bollinger Band Low with a 9 bar moving average and standard deviation multiplier of 2. The trading strategy exits a long position with a trailing stop. Each bar, a new ‘trailing’ sell stop order is generated with a stop price set to the lowest price over the last 3 bars. When the price goes below the ‘trailing’ stop price, the long position is sold.

The trading strategy is setup initially with the following parameters:

Long Entry ‘ BB Low Breakout(Close,9,2)

Long Trailing Stop ‘ PriceLow (Low, 3)

When a new chart based on the template is created, NeuroShell Trader asks if you want to backtest the trading strategy. If you answer yes, the Bollinger Band moving average size, Bollinger Band standard deviation multiplier and the number of bars for the low price trailing stop will be optimized for each chart page in your chart.