Bollinger Bands come with every charting platform: a 20-day average with a band two standard deviations above and below it. The popular way to trade them is to buy when the price closes under the lower band, because it has supposedly gone too far.
John Bollinger warns against exactly that. His own rules say: “A tag of the lower Bollinger Band is NOT in-and-of-itself a buy signal.” I tested it anyway, with his default 20/2 settings on gold since 2000: 106 closed trades.
The rules
- Buy when gold closes below the lower Bollinger Band: the 20-day simple moving average minus two standard deviations of the same 20 closes.
- Sell when gold closes back above the middle band (the 20-day average).
- John Bollinger’s default 20/2 settings on the daily close, population standard deviation. Long only; in cash between trades.
Market: Gold futures, continuous front month (GC=F); contract rolls can leave small price jumps.
The result
| Bollinger Band bounce | Buy-and-hold | |
|---|---|---|
| Annual return | 4.24% | 11.00% |
| Total return | 195% | 1416% |
| Max drawdown | −15.6% | −44.4% |
| Worst fall, from – to | Jun 2012 – Apr 2013 | Aug 2011 – Dec 2015 |
| Time in the market | 21% | 100% |
| Trades | Value |
|---|---|
| Closed trades | 106 (+1 open) |
| Winners | 83 (78.3%) |
| Average winner | +2.05% |
| Average loser | −2.50% |
| Win/loss ratio | 0.82 |
| Profit factor | 2.95 |
| Best / worst trade | +11.6% / −6.0% |
| Average holding time | 13 sessions |
My read
It wins a lot. 78% of the trades made money, and they were quick: 13 trading days on average. After a close below the lower band, gold usually did snap back to its average. On that point the popular version is right.
The trouble is the size. The average winner made 2.0%, the average loser lost 2.5%. Over the whole period it made 4.2% a year, while holding gold made 11.0% a year. It was in the market only 21% of the time, so it sat in cash through most of gold’s big runs. The worst trade bought in Nov 2016 and sold in Dec 2016 for a 6.0% loss.
What it did well was the downside. Its worst fall was 16%, against 44% for holding gold, which fell from Aug 2011 to Dec 2015.
It ended up about where the MACD crossover on gold did (4.3% a year), from the opposite direction. MACD lost more often than it won and lived on a few trends. This one wins most of the time and lives on small bounces. All of this is before costs.
My read: Bollinger was right. A close under the lower band tells you the price is stretched. It does not tell you the move is over. As a stand-alone rule it is a way to be right often and earn little; I would only use the band as a place to buy inside a trend I already trust.
Every trade
Open at the end of the data: bought Sep 29, 2026 at 4,179.7, −0.1% at the last close (Oct 13, 2026). Not counted in the trade statistics.
106 closed trades, newest first
| Bought | Price | Sold | Price | Result |
|---|---|---|---|---|
| 2026-06-10 | 4,133.3 | 2026-07-22 | 4,151.9 | +0.5% |
| 2026-04-29 | 4,561.5 | 2026-05-11 | 4,728.7 | +3.7% |
| 2026-03-19 | 4,605.7 | 2026-04-02 | 4,679.7 | +1.6% |
| 2025-06-30 | 3,307.7 | 2025-07-14 | 3,359.1 | +1.6% |
| 2024-11-12 | 2,606.3 | 2024-11-25 | 2,618.5 | +0.5% |
| 2024-01-18 | 2,021.6 | 2024-01-31 | 2,048.4 | +1.3% |
| 2023-09-27 | 1,890.9 | 2023-10-16 | 1,934.3 | +2.3% |
| 2023-08-16 | 1,928.3 | 2023-08-30 | 1,973.0 | +2.3% |
| 2023-06-23 | 1,929.6 | 2023-07-13 | 1,963.8 | +1.8% |
| 2023-05-19 | 1,981.6 | 2023-06-02 | 1,969.6 | −0.6% |
| 2022-09-02 | 1,722.6 | 2022-10-04 | 1,730.5 | +0.5% |
| 2022-07-06 | 1,736.5 | 2022-07-29 | 1,762.9 | +1.5% |
| 2022-06-15 | 1,819.6 | 2022-06-17 | 1,840.6 | +1.2% |
| 2022-04-26 | 1,904.1 | 2022-05-25 | 1,846.3 | −3.0% |
| 2021-09-17 | 1,751.4 | 2021-10-13 | 1,794.7 | +2.5% |
| 2021-08-09 | 1,726.5 | 2021-08-24 | 1,808.5 | +4.7% |
| 2021-06-16 | 1,861.4 | 2021-07-12 | 1,805.9 | −3.0% |
| 2021-03-31 | 1,713.8 | 2021-04-05 | 1,728.8 | +0.9% |
| 2021-02-18 | 1,775.0 | 2021-03-22 | 1,738.1 | −2.1% |
| 2021-02-05 | 1,813.0 | 2021-02-11 | 1,826.8 | +0.8% |
| 2020-11-10 | 1,876.4 | 2020-12-08 | 1,874.9 | −0.1% |
| 2020-10-29 | 1,868.0 | 2020-11-04 | 1,896.2 | +1.5% |
| 2020-09-22 | 1,907.6 | 2020-10-12 | 1,928.9 | +1.1% |
| 2020-06-08 | 1,705.1 | 2020-06-12 | 1,737.3 | +1.9% |
| 2020-03-16 | 1,485.9 | 2020-03-25 | 1,632.3 | +9.9% |
| 2019-11-08 | 1,461.3 | 2019-12-04 | 1,474.0 | +0.9% |
| 2019-10-01 | 1,482.0 | 2019-10-04 | 1,506.2 | +1.6% |
| 2019-04-17 | 1,272.2 | 2019-05-08 | 1,279.4 | +0.6% |
| 2019-03-05 | 1,282.0 | 2019-03-20 | 1,300.5 | +1.4% |
| 2018-11-12 | 1,201.3 | 2018-11-20 | 1,219.0 | +1.5% |
| 2018-09-28 | 1,191.5 | 2018-10-03 | 1,198.3 | +0.6% |
| 2018-06-18 | 1,276.2 | 2018-08-27 | 1,209.0 | −5.3% |
| 2018-05-02 | 1,302.6 | 2018-06-08 | 1,298.1 | −0.3% |
| 2017-12-06 | 1,262.8 | 2017-12-21 | 1,267.3 | +0.4% |
| 2017-07-05 | 1,220.4 | 2017-07-18 | 1,241.1 | +1.7% |
| 2017-05-05 | 1,224.8 | 2017-05-18 | 1,251.7 | +2.2% |
| 2017-03-09 | 1,202.4 | 2017-03-20 | 1,233.6 | +2.6% |
| 2016-11-15 | 1,224.0 | 2016-12-30 | 1,150.0 | −6.0% |
| 2016-10-05 | 1,265.2 | 2016-10-31 | 1,271.5 | +0.5% |
| 2016-08-25 | 1,320.1 | 2016-09-07 | 1,344.3 | +1.8% |
| 2016-05-25 | 1,223.5 | 2016-06-09 | 1,270.2 | +3.8% |
| 2015-12-18 | 1,066.2 | 2015-12-22 | 1,074.8 | +0.8% |
| 2015-11-04 | 1,106.5 | 2015-12-07 | 1,076.4 | −2.7% |
| 2015-07-08 | 1,163.3 | 2015-08-11 | 1,107.6 | −4.8% |
| 2015-05-04 | 1,186.8 | 2015-05-14 | 1,225.4 | +3.3% |
| 2015-04-27 | 1,203.3 | 2015-04-28 | 1,214.0 | +0.9% |
| 2015-02-12 | 1,220.1 | 2015-03-23 | 1,188.0 | −2.6% |
| 2014-11-03 | 1,169.4 | 2014-11-19 | 1,193.6 | +2.1% |
| 2014-08-22 | 1,278.6 | 2014-10-10 | 1,221.0 | −4.5% |
| 2014-07-25 | 1,303.1 | 2014-08-07 | 1,310.8 | +0.6% |
| 2014-05-28 | 1,259.3 | 2014-06-13 | 1,273.7 | +1.1% |
| 2013-12-20 | 1,205.1 | 2014-01-06 | 1,237.8 | +2.7% |
| 2013-09-13 | 1,308.4 | 2013-10-18 | 1,314.4 | +0.5% |
| 2013-06-21 | 1,291.6 | 2013-07-15 | 1,283.8 | −0.6% |
| 2013-05-20 | 1,384.3 | 2013-06-04 | 1,397.1 | +0.9% |
| 2013-04-04 | 1,551.8 | 2013-05-03 | 1,464.3 | −5.6% |
| 2013-02-15 | 1,608.8 | 2013-03-15 | 1,592.5 | −1.0% |
| 2012-12-05 | 1,692.4 | 2013-01-03 | 1,673.7 | −1.1% |
| 2012-10-16 | 1,744.7 | 2012-11-09 | 1,730.3 | −0.8% |
| 2012-06-29 | 1,603.5 | 2012-07-02 | 1,597.2 | −0.4% |
| 2012-05-09 | 1,593.7 | 2012-06-04 | 1,612.2 | +1.2% |
| 2012-04-05 | 1,628.5 | 2012-04-11 | 1,659.0 | +1.9% |
| 2012-03-07 | 1,683.3 | 2012-03-27 | 1,684.8 | +0.1% |
| 2011-12-15 | 1,574.6 | 2012-01-06 | 1,616.1 | +2.6% |
| 2011-11-22 | 1,702.2 | 2011-12-01 | 1,735.3 | +1.9% |
| 2011-09-23 | 1,637.5 | 2011-10-17 | 1,675.5 | +2.3% |
| 2011-06-27 | 1,496.0 | 2011-07-07 | 1,530.2 | +2.3% |
| 2010-07-02 | 1,207.4 | 2010-08-05 | 1,197.2 | −0.8% |
| 2010-03-25 | 1,092.7 | 2010-04-01 | 1,125.1 | +3.0% |
| 2010-02-05 | 1,052.2 | 2010-02-17 | 1,119.5 | +6.4% |
| 2009-07-09 | 915.9 | 2009-07-16 | 935.1 | +2.1% |
| 2009-04-07 | 882.2 | 2009-04-24 | 913.6 | +3.6% |
| 2009-01-15 | 806.7 | 2009-01-21 | 849.6 | +5.3% |
| 2008-10-17 | 785.1 | 2008-11-17 | 741.9 | −5.5% |
| 2008-08-06 | 875.6 | 2008-09-18 | 892.7 | +2.0% |
| 2008-04-30 | 862.8 | 2008-05-19 | 905.0 | +4.9% |
| 2008-03-24 | 918.3 | 2008-04-16 | 945.1 | +2.9% |
| 2007-08-17 | 656.9 | 2007-08-27 | 666.8 | +1.5% |
| 2007-06-11 | 654.3 | 2007-06-20 | 656.1 | +0.3% |
| 2007-05-11 | 670.6 | 2007-06-04 | 670.7 | +0.0% |
| 2007-03-06 | 643.8 | 2007-03-22 | 663.4 | +3.0% |
| 2007-01-08 | 607.5 | 2007-01-16 | 624.6 | +2.8% |
| 2006-10-05 | 571.0 | 2006-10-16 | 594.7 | +4.2% |
| 2006-09-12 | 586.9 | 2006-09-29 | 598.6 | +2.0% |
| 2006-06-14 | 562.3 | 2006-07-05 | 627.3 | +11.6% |
| 2006-02-14 | 545.9 | 2006-02-27 | 554.7 | +1.6% |
| 2005-11-02 | 462.8 | 2005-11-10 | 466.6 | +0.8% |
| 2005-05-16 | 418.9 | 2005-06-03 | 423.7 | +1.1% |
| 2005-03-24 | 424.7 | 2005-04-19 | 432.9 | +1.9% |
| 2005-02-04 | 414.0 | 2005-02-15 | 425.9 | +2.9% |
| 2005-01-07 | 418.9 | 2005-01-27 | 426.3 | +1.8% |
| 2004-04-15 | 397.7 | 2004-05-24 | 385.6 | −3.0% |
| 2004-01-30 | 402.2 | 2004-02-12 | 413.7 | +2.9% |
| 2003-10-06 | 372.7 | 2003-10-22 | 386.5 | +3.7% |
| 2003-06-25 | 349.3 | 2003-07-21 | 350.9 | +0.5% |
| 2003-03-14 | 336.5 | 2003-04-22 | 334.4 | −0.6% |
| 2003-02-19 | 349.9 | 2003-03-07 | 350.8 | +0.3% |
| 2002-10-16 | 314.0 | 2002-10-30 | 316.5 | +0.8% |
| 2002-07-29 | 302.5 | 2002-08-08 | 310.4 | +2.6% |
| 2002-07-01 | 314.0 | 2002-07-16 | 317.2 | +1.0% |
| 2001-11-20 | 273.0 | 2001-12-04 | 275.4 | +0.9% |
| 2001-10-12 | 284.9 | 2001-11-08 | 276.8 | −2.8% |
| 2001-07-06 | 265.9 | 2001-07-19 | 269.4 | +1.3% |
| 2001-02-09 | 259.9 | 2001-02-27 | 267.4 | +2.9% |
| 2001-01-11 | 264.0 | 2001-01-31 | 265.6 | +0.6% |
| 2000-10-26 | 264.9 | 2000-11-17 | 265.7 | +0.3% |
How it was tested
- Signals are read on the daily close; each trade happens at the next day’s close. No look-ahead.
- Long only, fully in or fully out. No commissions, slippage, interest or dividends.
- The test starts on the first day every indicator has a value (Sep 28, 2000); buy-and-hold covers the same days.
- Prices: Yahoo Finance daily data (GC=F), snapshot
gold-2026-10-14.csv. Checked by a second, independent program before publishing.
Not financial advice. This is educational content, shared for information and entertainment only, and it is not a recommendation to buy or sell any asset. Backtests and past results do not guarantee future results, and the numbers or charts here may contain mistakes. Trading carries risk, including losing all the money you put in. Do your own research before you make any decision.