Bollinger Bands

Bollinger Bands strategy is used to identify a range of possible prices for an asset in the next period. Bollinger Bands are based on moving averages and volatility, and are often used by to assess the potential for price fluctuations. By setting up a band of plausible prices, this strategy helps determine the range in which they can make positions.

Bollinger Bands are calculated using three lines:

1. Middle band
   • The middle band is typically a simple moving average (SMA) of the asset's price over a specified period.
2. Upper band & Lower band
   • The upper and lower bands are calculated by adding and subtracting a specified number of standard deviations of the price from the middle band.

The formula for calculating Bollinger Bands is as follows:

$$Middle Band = n-period simple moving average (SMA)$$

$$Upper Band = Middle Band + (k * n-period standard deviation)$$

$$Lower Band = Middle Band - (k * n-period standard deviation)$$

where:

n is the number of periods used for the SMA and standard deviation calculation k is the number of standard deviations to be added or subtracted from the middle band Typically, the values of n and k are set to 20 and 2, respectively, but they can be adjusted based on the trader's preference and the characteristics of the asset being analyzed. The resulting bands form a range within which the price is likely to move, and can use this information to make trading decisions. When the price moves towards the upper or lower band, it may suggest that the asset is overbought or oversold, respectively, and may use this information to enter or exit positions.

As the normalization features of the strategy are updated, can expect further enhancements and refinements to the approach.

info

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The execution of the bundle essentially refers to the calculation of these values, which are then handled by the Steer Protocol.