06ILLUSTRATIVE

Bollinger Mean-Reversion

Sell the upper band / buy the lower band when RSI confirms overbought or oversold.

MetaTrader 5

M30 timeframe

EA Bots running on live accounts

See the XAUUSD bot profiles, backtest reports and how to follow the MT5 accounts.

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How to use the strategy

Works in sideways markets; turn the EA Trading Bot off when there is a strong one-way trend. Trade against the Bollinger band when RSI is overbought/oversold.

Full parameters

BB_LEN=20BB_DEV=2RSI_OB=70RSI_OS=30

How it works

Bollinger Bands measure how far price has strayed from the average. When price touches the upper band and RSI signals overbought, the system sells on the assumption that price will return to the middle of the band; a lower-band touch with oversold works the other way.

CONCEPT ILLUSTRATION · Price touches the lower Bollinger band, wait for RSI to confirmTouches the lower band → wait to BUY · BB 20, 2σUpper band20-period averageLower band

CONCEPT ILLUSTRATION · Upper band and RSI overbought — sell signalTouches the upper band → wait to SELL · BB 20, 2σUpper band20-period averageLower band

What each parameter means

BB_LEN 20: The number of candles used for the band's moving average.
BB_DEV 2: The band width is 2 standard deviations. A touch of the band is a relatively rare event.
RSI_OB 70 / RSI_OS 30: The overbought and oversold thresholds, acting as a second confirmation.

When it fits, when it struggles

Fits when: The market moves sideways, with price oscillating around a value zone.

CONCEPT ILLUSTRATION · Favorable conditions: The market moves sideways, with price oscillating around a value zone.Price returns to the balance zoneRange edgePrice

Struggles when: A strong one-way trend. Price can ride the band for many periods while RSI stays overbought for a long time, and every counter-trend trade loses.

CONCEPT ILLUSTRATION · Difficult conditions: A strong one-way trend. Price can ride the band for many periods while RSI stays overbought for a long time, and every counter-trend trade loses.Bands narrow → watch for the breakoutUpper / lower bandMiddle SMA

Common mistakes

Letting the EA Trading Bot run through a trending period. A mean-reversion strategy needs to be switched off when the market starts running one way.

To judge a strategy by its numbers rather than its description, read the six numbers to check in a backtest report.

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Data labeled ILLUSTRATIVE is only used to simulate the interface and does not represent actual trading results.