Inspiration

The Triple B strategy integrates three complementary indicators. At its core is the %B indicator, derived from Bollinger Bands. This indicator was introduced by John Bollinger, the creator of Bollinger Bands, nearly three decades after the original bands were developed. The additional indicators in the strategy serve to support and refine the actions of the Triple B strategy.

Key components

• The strategy is reversal-based, meaning it aligns with the typical nature of most stocks.

• %B as the foundation. This indicator is crucial, although not the only element of the Triple B strategy. It helps identify overbought and oversold conditions in the market and identify potential reversal points. While %B is at the core of the strategy, it's worth noting that the Triple B strategy includes a specific application of this indicator, a second supporting indicator, and two filters that activate or deactivate based on prevailing conditions.

• The Stockpicker mechanism searches and automatically selects stocks that meet the entry criteria.

  
  
  
  

Backtest 1 - $ Money Management

In this variant, we invest a constant amount of $100k, which is divided by the maximum number of open positions (10). This results in a capital commitment of up to $10k per position.

The backtest automatically selects stocks that meet the criteria from the S&P 500 index. It is important to note that the list of stocks included in the index has changed over the years, and this is accounted for in the Stockpicker data (survivorship bias).

• Invested capital: $100k

• Test Index: S&P 500

• Testing period: 31 years (1995-2025)
  

Equity Chart for this test:

Basic statistics and results month by month:

In the table, we highlighted the moment when the strategy was published.

Click the button to see the latest backtest:

Backtest 2 - % Money Management

In this backtest, we invest in a strategy that allocates 100% of the current capital (starting with $100k). This means that as the capital grows or decreases, the position value changes proportionally. The rest of the parameters remain unchanged.

We are testing a 31-year period from 1995 to 2025.

The chart includes a benchmark - a thin yellow line at the bottom.

A red line on the chart is an Open Drawdown line.

Basic statistics resulting from the test:

Trading Strategy Analysis

Net profit and CAGR

The tested strategy's net profit is $6,136,840, significantly outperforming the S&P 500 Index / SPY ETF benchmark, which achieved $2,463,852. This results in a CAGR of 14.26% for the strategy, compared to 11.03% for the benchmark over the same period.

Drawdown and Return/Drawdown Ratio

The maximum open drawdown in the tested strategy was 31.07%, compared to 55.19% in the benchmark. Although the Return/Open Drawdown ratio is slightly lower than before, the strategy still provides a significantly better 1-to-1 return-to-risk profile than the index.

Exposure

The tested strategy had an average exposure of 69.59%, compared to 100% in the benchmark. The study was conducted on S&P 500 index stocks. The strategy used less capital overall, reducing market risk and leaving free capital available for other strategies.

The exposure-adjusted return was 20.49%, compared to 11.03% for the fully invested benchmark.

Winning Percent

The winning percentage of the tested strategy was 66.15%. This indicates that most trades were profitable, underscoring the strategy's effectiveness in generating positive results and boosting the user's confidence in its ability to consistently produce profits.

SL & TP

The strategy avoids using typical stop-loss and take-profit orders. Our tests show that for most stock strategies, these settings can worsen results. Instead, the strategy includes one exit signal or an additional safety exit after X bars, which acts as a time-based stop-loss. Diversifying positions within a single strategy and across the portfolio helps protect against the significant impact of a single stock price change on the entire portfolio. Visit the stop loss order page for more information.

Market Regime

The strategy was tested in all basic market regimes and includes filters based on these tests. Read more about market regimes.

Trading Costs

Trading costs and slippage were taken into account in the backtests. You can check our last research about trading costs using Alpaca Broker here. With a diversified portfolio of stocks and strategies, transaction costs can determine your profit or loss, so take the time to thoroughly test and choose a broker.

Robustness

We evaluated robustness by executing all possible stock transactions from 1995 to 2025. For the Nasdaq 100, we permitted a maximum of 40 open positions, resulting in 14,203 transactions. Similarly, for the Russell 1000, we allowed up to 40 open positions, leading to 44,311 transactions, all at %MM. This strategy successfully passed our parameter modification tests.

We believe that fewer parameters lead to greater robustness in a strategy. Therefore, we strive to keep our strategies simple, using only parameters that significantly impact effectiveness and align with the strategy's nature.

Nasdaq 100 max transactions: 14,203

Russell 1000 max transactions: 44,311

The results are as follows:

Recommended instruments

The recommended primary instrument for this strategy in Algocloud Stockpicker is the S&P 500 index companies, which have shown the best historical results. However, the strategy also yields stable results with Nasdaq 100 stocks.

Primary instrument: S&P 500

Supplementary instrument: Nasdaq 100 100

Pattern Day Trader

In the study of the S&P 500 index, the percentage of transactions closed on the same day amounted to 6 cases over 31 years. We thoroughly analyzed the strategy's behavior in the context of the Pattern Day Trading (PDT) rule. Statistically, this occurred once every 5 years. In our assessment, this may be acceptable even for smaller accounts, provided you understand how the PDT protection activated by your broker works. More information can be found here.

If your account is below $25k, your strategy portfolio should also be subject to PDT examination. Therefore, we suggest you familiarize yourself with our PDT Finder and Exposure Master tools, which we provide for free as part of the BONUS.

Correlation

To check the correlation of the strategy with others, go to the page dedicated to correlations.

The strategy shows an inverse correlation to reversal strategies, which is a significant advantage.

Summary & Strengths and Weaknesses

Strengths of the strategy:

• Over the long term, the strategy consistently outperforms the passive S&P 500 index in both total return and capital growth rate, offering a more favorable risk-reward profile.

• Maximum drawdowns are significantly shallower than those of the benchmark, resulting in better risk control even during periods of strong market declines.

• A high percentage of profitable trades and consistent results across different market regimes make it easier to psychologically maintain the strategy in the portfolio during tougher periods.

• The strategy delivers an attractive exposure-adjusted return, allowing some funds to be allocated to other opportunities.

Weaknesses of the strategy:

• Although the strategy has a better risk profile than the index, it can still result in significant drawdowns. This requires investors to accept increased volatility and maintain disciplined risk management.

• High activity and numerous transactions suggest sensitivity to transaction costs and the potential risk of triggering PDT conditions on smaller accounts, particularly when combined with other equally active strategies in the portfolio.

Summary

The Triple B strategy illustrates that a straightforward, well-tested reversal logic can consistently outperform a passive index while effectively managing risk. Over the long term, this system has maintained an edge over the benchmark in terms of both capital growth dynamics and drawdown depth, achieving this with partial capital engagement. The strategy performs well across various market conditions—from bull markets to significant declines—and its high win rate helps investors weather inevitable periods of underperformance. However, Triple B is an active, heavily traded strategy that requires acceptance of periodic drawdowns and a mindful approach to transaction costs. Consequently, it can serve as a foundational element of a long-term equity portfolio for investors who build their portfolios from several uncorrelated systems and consciously manage risk.

What you receive in the package for this strategy:

• The eBook has detailed rules and results for the strategy.

• The SQX file is ready to be used on the Algocloud and StrategyQuant platforms.

• Pseudocode describing all the rules in an easy-to-understand manner.

• Key indicators Tradingview code.