Touch vs close below the band?
Intraday wicks can tag a band without the candle closing outside it. "Close below the lower band" is stricter and usually produces fewer, higher-conviction signals. Try both and compare trade count.
Strategy template
Backtest Bollinger bands on crypto
Bollinger bands wrap price in a moving average plus upper and lower envelopes. Mean-reversion traders fade touches of the outer bands — long near the lower band, short near the upper — betting price returns toward the middle. This template mirrors the BTC Bollinger idea from the Torquant landing demo.
What this strategy does
Bollinger Bands use a middle SMA(20) with upper and lower bands at 2 standard deviations by default. When volatility expands, the bands widen; when price tags the lower band, the mean-reversion read is that BTC stretched too far down relative to recent history. The upper band is the mirror for shorts.
Band touches happen often in trends too — price can "walk the band" instead of reverting. That is why you backtest: to see whether fades worked on BTC daily over your date range, not because the textbook says they should.
Long-only vs long/short
- Long-only fades of the lower band are the gentlest first test — similar to buying RSI dips.
- Long and short at both bands captures range markets but adds risk in strong trends.
- Exit at the middle band is a common target; some traders hold for the opposite band instead.
Default prompt: BTC daily band fade (long and short)
This matches the landing typing demo: long at the lower band, short at the upper, using standard 20-period bands and 2 standard deviations.
Torquant prompt
"BTCUSDT daily from 2020 to today. Bollinger Bands(20, 2). Long when close touches or crosses below the lower band. Short when close touches or crosses above the upper band. Exit long when close reaches the middle band. Exit short when close reaches the middle band. 25% of equity per trade."
Variants to try next
Torquant prompt — long-only lower band
"BTCUSDT daily from 2020 to today. Bollinger Bands(20, 2). Long only. Enter when close closes below the lower band. Exit when close closes above the middle band. Use 25% of equity per trade."
Torquant prompt — ETH 4h bands
"ETHUSDT 4h from 2021 to today. Bollinger Bands(20, 2). Long when close touches or crosses below the lower band. Exit when close reaches the middle band. Long only. 30% of equity per trade."
Torquant prompt — wider bands (2.5 std dev)
"BTCUSDT daily from 2020 to today. Bollinger Bands(20, 2.5). Long only. Enter when close closes below the lower band. Exit when close closes above the middle band. 25% of equity per trade."
How to read the backtest
- Band walks in bull markets can hurt short fades — check short-side P&L separately if you run long/short.
- Fewer touches with 2.5 std dev bands means fewer trades; compare trade count to the 2.0 default.
- Drawdown during 2022-style trends matters more for short-and-long systems than for long-only RSI-style dips.
- Benchmark against buy and hold on BTC over the same window.
Simulations use spot market candles. Short and leverage rules are honored when you describe them; perpetual funding and liquidation are not included.
Common questions
What does (20, 2) mean?
20-period lookback for the middle SMA, bands plotted 2 standard deviations away. It is the standard default in most charting platforms — a reasonable baseline before you optimize.
Can I combine Bollinger bands with RSI?
Yes. Example: "Long when close is below the lower band and RSI(14) is below 35." Combo filters reduce trades but may cut false fades — test in a follow-up run.
More strategy templates
Run the BTC band fade
Open Torquant, paste the default prompt, and backtest Bollinger mean reversion on historical BTC candles.