Aberration Trend Following Strategy

Aberration Trend-Following Strategy

A legendary long-term trend-following system originally developed by Keith Fitschen in 1986, designed to capture major market trends using Bollinger Bands and volatility filtering.

🔹 STRATEGY OVERVIEW
This mechanical system identifies trend reversals by detecting price breakouts beyond Bollinger Bands, while filtering trades based on market volatility conditions.

🔹 ENTRY SIGNALS
- Long Entry: Price closes above the upper Bollinger Band + volatility conditions met
- Short Entry: Price closes below the lower Bollinger Band + volatility conditions met

🔹 EXIT SIGNALS
- Exit positions when price returns to the middle band (20-period SMA)

🔹 VOLATILITY FILTER
- Only trades when ATR is within acceptable range vs. historical median volatility
- Avoids trading in extremely low or excessively high volatility environments
- Helps reduce false signals during choppy, range-bound markets

🔹 KEY PARAMETERS
- Bollinger Band Period: 20 (customizable)
- Bollinger Band Multiplier: 2.0 (customizable)
- ATR Length: 20
- Volatility Lookback: 50 periods
- Volatility Range: 0.80 to 2.00 of median

🔹 STRATEGY CHARACTERISTICS
- Timeframe: Long-term (holds positions for extended periods)
- Trade Frequency: 3-4 trades per market annually
- Philosophy: Cut losses short, let profits run
- Best suited for: Trending markets across commodities, futures, and indices

⚠️ RISK DISCLAIMER
This strategy is for educational purposes only. Past performance does not guarantee future results. Always perform your own backtesting and risk assessment before live trading.

📊 VISUALIZATION
- Blue lines: Upper and lower Bollinger Bands
- Orange line: Middle band (basis/SMA)
- Green triangles: Long entry signals
- Red triangles: Short entry signals
- Yellow crosses: Exit signals