Trade signals

Quant Trading Strategies & Ideas
1

Course Name: Quantitative Trading Strategies and Models, Section No: 11, Unit No: 161, Unit type: Notebook



In the Signal columns section, the buy trade signal is placed where the close price crosses the upper Bollinger band, and a sell trade signal is placed where the close price crosses the lower Bollinger band.



If the expectation is that the price will correct the following periods, shouldn't the trade signals be reversed? If I understood correctly, isn't it the expectation that, when the close price crosses the upper Bollinger band, the correction will be downwards, and the reverse for crossing the lower Bollinger band?

2

Hi Anthony,



Yes, you are correct! The strategy is to enter a short position when the price & returns cross the upper band, and, enter a long position when price & returns cross the lower band.



The notebook seems to have mixed up the signals, apologies for that! Our team shall fix that error soon.



Thanks!