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By Adam Khoo
Copyright ©
Adam Khoo Learning Technologies Group Pte Ltd 2017
Swing Trading System:
Bollinger Mean Reversion
Bollinger Mean Reversion
The Bollinger Mean Reversion (BMR) is a swing trading strategy that seeks to
buy stocks that are oversold on a short term basis and short stocks that are
overbought on a short term basis. This is a counter trend, mean reversion
strategy.
Overbought
Short
Long
Oversold
BMR Long Setup
Long
Oversold
BMR Long Setup: Bullish Pin Bar
50MA
20EMA
MACD (12,26,9)
Full Stohcastics
(5,3,3)
RSI
(10)
BMR Long Setup
Entry Rules for Long BMR
• SPY is above 20EMA (index is short term bullish) and SPY MACD is Bullish
• Price Declines Rapidly to a New Low (6 months)
• Highest probability is when this coincides with a previous support level (bullish pin must be lower than
previous lows)
• Bullish Pin pierces or appears outside the lower Bollinger Bands (20SMA, 2 standard deviation) and far from the
20EMA (at least 1R Away)
• At least 1 bullish divergence reversal from MACD, Stochastics or RSI indicator.
Placing Orders for Long BMR
• Entry: Buy stop limit order 1-10 cents above Bullish pin
• Stop Loss: Sell stop order 1-10 cents below Bullish pin
• The Distance between Entry and stop loss is 1R. There should be at least a 1R distance to the 20EMA
• Target price: Sell Limit placed 2R above entry price
• The target price should be below the 50MA
2R
Buy stop limit
1R
Sell Stop GTC
Long BMR
Sell Limit
Sell Stop
Bullish pin at
Lowest low
Bullish Divergence
Sell Limit
Sell Stop
Bullish pin at
Bullish Divergence Lowest low
Long BMR
Sell Limit
Sell Stop
Bullish pin at
Lowest low
Bullish Divergence
Long BMR
sell limit
Overbought
Short
BMR Short Setup: Bearish Pin Bar
• Stop Loss: Buy stop order 1-10 cents above Bearish pin
• The Distance between Entry and stop loss is 1R. The Distance between Entry and stop loss is 1R. There should be at least
a 1R distance to the 20EMA
2R
Buy Limit GTC
Short BMR
Highest high in last 6 months
Bearish Pierce BB
Buy stop
Buy limit
Divergence on Stochastics
Short BMR
Highest high in last 6 months
Buy stop
Sell stop limit
Buy limit
By Adam Khoo
adam@akltg.com
Copyright ©
Adam Khoo Learning Technologies Group Pte Ltd 2017
Long BMR
TC2000 PCF Script for Screening
• Avoid entering trades when stocks have less than 150,000 average
volume a day
By Adam Khoo
Copyright ©
Adam Khoo Learning Technologies Group Pte Ltd 2017