Hi everyone! This is my first post here. I’m not completely sure about how to insert my code correctly but I’ll give it a try.
I’m working on a new strategy based on Bollinger% and Bollinger bands. It’s an only long strategy where I’m looking to buy at extreme lows or extreme deviation from the average. Specifically I want it to buy when price is below the Bollinger bands. For example when low is 2.8 standard deviations below the 20 average. And I also want the B% to be higher than the previous bar.
My strategy works well in backtesting and it looks like it does exactly what I want. But as I’ve come to learn it won’t work live because when I calculate the Bollinger% it gives a negative number (below zero) when price moves below the lower band.
Acording to the written information in Pro real time it says that Bollinger% is calculated like below;
B% = (close – lower band) / (upper band – lower band)
Two of my criteria are therefore calculated like this;
Bpercent = (close - Average[20](close)-2.8*std[20](close)) / (Average[20](close)+2.8*std[20](close) - Average[20](close)-2.8*std[20](close))
C3 = Bpercent > Bpercent[1]
indicator2 = Average[20](close)-2.8*std[20](close)
C4 = (low < indicator2)
Is there a way to keep the strategy as it is and to get around the problem with dividing by zero?
I’ll be very thankful for any help that will point me in the right direction since I can’t figure out how to make it work live.
The issue is actually a parentheses problem in your formula. Check the denominator:
Average[20](close)+2.8*std[20](close) - Average[20](close)-2.8*std[20](close)
Is evaluated as: avg+2.8*std-avg-2.8*std = always zero.
Thanks for your reply. Can’t believe I didn’t think about that 🙂
My first idea that comes to mind is to change the positive std to 2.81 or maybe a little more to end up with a number slightly above 0. That should have a minimal impact on the strategy.
Is there maybe a better idea to solve this?
Never mind, bad idea. Even a small change to 2.81 makes the result far less good. Is this solvable just by changing the parentheses? I’m not quite sure how.
Hi, it’s not about avoiding zero by changing 2.8 to 2.81, it’s about a “double minus” that should have become “plus” if not writing parenthesis but was made a simple minus in your denominator.
To correct it, either add parenthesis as Ivan mentionned: (Average[20](close)+2.8*std[20](close) – ( Average[20](close)-2.8*std[20](close) ) )
Or don’t add them, but the last minus becomes a plus: (Average[20](close)+2.8*std[20](close) – Average[20](close) + 2.8*std[20](close))
I understand the problem now. Thank you very much!
