Overview
The Bollinger Bands Trading bot uses a popular technical indicator that consists of a simple moving average (middle band) and two standard deviation bands above and below it. The bot enters positions when price moves below the lower band (oversold condition) and exits based on either the upper band or your specified profit/loss targets.
The strategy is particularly effective in ranging markets where price tends to oscillate between overbought and oversold conditions.
Details
Bollinger Bands consist of three lines:
Middle Band: A simple moving average (SMA)
Upper Band: SMA + (Standard Deviation × Multiplier)
Lower Band: SMA - (Standard Deviation × Multiplier)
The bot's trading logic:
Entry: Buy when price moves below the lower band (oversold condition)
Exit: Two available strategies:
Indicator-based: Sell when price crosses above the upper band
Target-based: Sell when either profit target or stop loss is hit
How to Configure the Bot
General Settings
Exchange Platform: Select your preferred exchange
Trading Account: Choose the account for bot operations
Market: Select the trading pair (e.g. BTC/USDT)
Starting Capital: Amount of quote currency to allocate to the bot
This amount is used for initial purchases
Profits are automatically reinvested in subsequent trades
Strategy Settings
Candle Timeframe: Chart interval for analysis
Options: 1m, 5m, 15m, 1h, 4h, 1d
Lower timeframes = more frequent trades
Higher timeframes = fewer but potentially higher-quality signals
Moving Average Period: Number of candles for calculating the bands
Higher values create smoother, slower-moving bands
Lower values create more responsive, faster-moving bands
Default: 10 periods
Band Std Dev Multiplier: Controls band width
Higher values = wider bands, fewer signals
Lower values = tighter bands, more signals
Default: 0.8
Exit Strategy: Choose between:
Profit Target or Stop Loss: Exit at specified profit/loss levels
Indicator Confirmation: Exit when price crosses upper band
Cooldown Period: Number of candles to wait after closing a position
Helps avoid immediate re-entry in volatile conditions
Set to 0 for no delay between trades
Profit & Risk Management
(Only visible when using "Profit Target or Stop Loss" exit strategy)
Profit Target: Percentage gain to trigger position close
Example: 1% = close when profit reaches 1%
Can set values above 100% for longer-term trades
Stop Loss: Percentage loss to trigger position close
Example: 1% = close when loss reaches 1%
Set to 100% to effectively disable stop loss
Frequently Asked Questions
How does the bot calculate entry points?
The bot monitors price action relative to the Bollinger Bands. When price moves below the lower band, it's considered oversold and triggers a buy signal. The bot uses your entire available capital (accounting for fees) to enter positions.
Which exit strategy should I choose?
Indicator Confirmation: Better for ranging markets where price regularly oscillates between bands
More natural exits based on market conditions
May capture larger moves
No fixed profit target
Profit Target or Stop Loss: Better for more controlled risk management
Fixed profit targets ensure consistent gains
Stop losses protect capital
More predictable trading behavior
How should I set the Moving Average Period?
Shorter periods (5-10): More signals, better for volatile markets
Medium periods (20-50): Balanced approach, standard for most markets
Longer periods (50+): Fewer signals, better for trending markets
What Band Multiplier should I use?
Standard setting is 2.0 (traditional Bollinger Bands)
Lower values (0.5-1.5): More trading signals
Higher values (2.0-3.0): Fewer, potentially higher-quality signals
Default of 0.8 provides more frequent signals
How does the Cooldown Period work?
After closing a position, the bot will wait for the specified number of candles before taking new trades. For example:
With 5-minute candles and cooldown of 12:
Bot will wait 1 hour after each trade
Set to 0 for continuous trading
Higher values help avoid choppy market conditions
What happens to profits?
The bot automatically reinvests profits in subsequent trades. The available capital is updated after each trade to include any gains or losses, allowing the bot to compound returns over time.
Remember that Bollinger Bands work best in ranging markets where price tends to oscillate between overbought and oversold conditions. Consider using longer timeframes and appropriate band settings in trending markets to avoid false signals.