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Bollinger Bands

Bollinger Bands are a tool used in technical analysis to evaluate relative high and low prices. These bands consist of three lines: a simple moving average, an upper band, and a lower band. The upper and lower bands are positioned two standard deviations away from the simple moving average.

In trading, Bollinger Bands are frequently utilized to determine overbought and oversold market conditions. When prices approach the upper band, it signifies that the market is overbought, while movement near the lower band indicates an oversold market. Traders can leverage this information when making buying and selling decisions.

When using Bollinger Bands with Gunbot, you can customize the percentage thresholds for triggering trades. Specifically, you can define the percentage distance from the lower Bollinger Band for purchasing, and the percentage distance from the upper Bollinger Band for selling. Gunbot will automatically place orders once prices reach the specified distances from the bands.

Working with Bollinger Bands

Conditions for buying

A buy order is permitted when the price falls below the lower band, and the price is at least the buy level % below the lesser value of EMA1 and EMA2.

You can also employ the Low BB setting to adjust the threshold anywhere between the bands, instead of using the actual lower band.

Conditions for selling

A sell order is permitted when the price rises above the upper band and the gain % target has been achieved.

Additionally, you can use the High BB setting to modify the threshold between the bands rather than relying on the actual upper band.

Trading example

This example demonstrates how trading with this strategy could perform. The specific details and settings can be found here._

The following infographic illustrates what triggers trades using this strategy.

Keep in mind that this explanation is intentionally simplified. In reality, prices must also fall below the BUYLEVEL _before a buy order is activated.