Testing The Dynamic Reversal Band Trading Strategy

Testing The Dynamic Reversal Band Trading Strategy — Can I Win My Bitcoin Short?

Recently, I developed a new trading strategy. The strategy combines Bollinger Bands with the Stochastic Oscillator to identify potential reversal points in the market.

So, basically, it aims to capture trades when the price hits extreme levels, signaling overbought or oversold conditions and then reverses direction. The strategy is further hardened by adding the ADX and EMA200 as entry gatekeepers.

Backtests on the 4H chart showed strong results when using a risk/reward ratio of >2 and a stop loss of>3. Although the strategy does not provide the highest success rate, it generates sustainable wins based on the R/R ratio.

Now, on to my ongoing trade:

Since Bitcoin recently flashed a short entry, I wanted to try it and opened a small short (check the chart). The take profit will be triggered slightly below 57k, while the stop loss hits slightly below 62.5k.

I will keep you posted on the outcome!

PS: The strategy is available for free on TradingView: