Larry Connors Bollinger %B Strategy Diagram
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A long-only mean-reversion diagram built on Bollinger %B, the position of the close inside the Bollinger band expressed as a percentage of the band width. The idea of Larry Connors is that a single weak candle proves nothing, so the diagram waits for %B to stay in the lower part of the band on two candles in a row before it buys, and holds until %B recovers into the upper part.
Strategy Overview
- The BollingerPercentB indicator calculates the price's position within the bands on a scale from 0 to 100, so the classic 0.35 and 0.8 thresholds are written as 35 and 80.
- A previous-value block keeps the reading of the last candle, which is what turns a single weak candle into a two-candle condition.
- The strategy is long only: it buys weakness and sells that same long back, never opening a short.
- The position takes part in both decisions, so the entry cannot stack and the exit cannot fire on a flat book.
Entry and Exit Rules
- Long entry: %B of the previous candle and %B of the current candle are both below the low threshold, and the position is not long. The order buys one lot.
- Short entry: The diagram never sells short. The sell block only serves as the exit of an open long.
- Exit: %B rises above the high threshold while the position is long. The order sells the same one lot and brings the position back to flat.
Parameters
| Parameter | Default | Description |
|---|---|---|
| Bollinger Period | 20 | Length of the Bollinger bands the %B reading is built on. |
| Bollinger Deviation | 2 | Standard deviation multiplier of the Bollinger bands. |
| Low %B | 35 | Threshold below which %B counts as the lower part of the band; it has to hold for two candles. |
| High %B | 80 | Threshold above which %B counts as recovered, which closes the long. |
| Volume | 1 | Order volume, in lots. |
| Candles | 00:05:00 | Candle time frame the whole diagram works on. |
Diagram Details
- The candle block feeds the indicator block, whose value goes both into the comparisons and into the previous-value block.
- Two comparisons against the same low constant give the current and the one-candle-old condition; a third compares %B with the high constant for the exit.
- Two more comparisons check the position against zero: not long for the entry, long for the exit.
- The two logical AND blocks trigger the position modify blocks, both of which take their volume from a single shared constant.
Usage
Import the .json file into Designer, run it in the backtester on historical data, then adjust the parameters or the blocks themselves to fit your instrument before trading it live.