Inspiration

The Triple B strategy combines three indicators that support each other. The foundation of the strategy is the %B indicator based on Bollinger Bands. This indicator was introduced by the creator of Bollinger Bands, John Bollinger, almost three decades after the famous Bollinger Bands were introduced. The additional indicators used in the strategy support and filter the TripleB's actions.

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 TripleB strategy. It helps identify overbought and oversold conditions in the market, finding 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.

We are testing the period of the last 30 years from 1994 to February 2025.

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 changed over the years, which is taken into account in the Stockpicker data (survivorship bias).

• Invested capital: $100k

• Test period in years: 30

• Test years: 1994-02.2025

• Test Index: S&P 500
  

Equity Chart for this test:

Basic statistics and results month by month:

Click the button to see the latest backtest:

Backtest 2, % Money Management

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

The equity chart for this test looks as follows.

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 exceeds $33 million, which is 15 times higher than the Benchmark (S&P 500 Index/SPY ETF, marked in yellow on the chart) at $2 million. This translates to a CAGR of 20.63% compared to 10.53%. This means the tested strategy not only achieves a much higher net profit but also a higher average annual return. A CAGR that's twice as high makes a significant (15x) positive difference in the long run.

Drawdown and Return/Drawdown Ratio

The maximum open drawdown in the tested strategy was -29.75%, compared to -55.19% in the benchmark. This results in a better Return/Open Drawdown ratio of 12.55 versus 5.07. This indicates that the tested strategy is less risky and more stable, as the maximum capital drawdown is smaller, leading to better risk management compared to the benchmark.

Exposure

The tested strategy had an average exposure of 68%, compared to 100% in the benchmark. The study focused on the S&P 500 index stocks. You can read about how exposure is measured through dedicated research here. The strategy used less capital, reducing market risk and leaving more capital available for other strategies.

Winning Percent

The winning percentage in the tested strategy was 66.25%. This means most transactions were profitable, highlighting the strategy's effectiveness in generating positive results. It gives the user greater confidence in the frequency of profit generation.

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 assessed robustness by conducting all possible stock transactions from 1994 to 2025. For the Nasdaq 100, we allowed a maximum of 50 open positions, resulting in 16,023 transactions. For the Russell 1000, we allowed up to 100 open positions, leading to 97,857 transactions, all at %MM. This strategy also 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: 16'023

Russell 1000 max transactions: 97'857

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

The percentage of closed transactions on the same day in the study on the S&P500 index was approximately 5.5%, which is just slightly below the 6% threshold. We examined in detail the behavior of the strategy in terms of the Pattern Day Trading (PDT) rule. Over 30 years, there were 24 instances of meeting the PDT criteria. Therefore, statistically, it occurred less than once a year. In our assessment, it may be acceptable even for smaller accounts, provided that you understand how the PDT protection activated by your broker works, more information 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, visit the correlations page.

Summary & Strengths and Weaknesses of the strategy

Over the course of 30 years, the analyzed strategy had 3 losing years, which is a very good result for a Stockpicker strategy. The Max Drawdown was 24.45%, which is relatively low for long-term investment strategies.

Strengths of the strategy:

• Profit stability. In the analyzed strategy, the Net Profit was $33 milon, while the Benchmark achieved above $2 milon, making it a 15x better result (!). The CAGR was 20%, significantly higher than the Benchmark's 10%.

• Low drawdown. The Max Open Drawdown in the analyzed strategy was 29% compared to 55% in the Benchmark, showing that the strategy is less risky and more stable.

• High winning percent ratio. 66% of trades ended in profit, highlighting its effectiveness and ease of application.

• Robustness. The strategy was successfully tested on the Nasdaq 100 and Russell 1000 indices, reaching a maximum of 16'023 and 97'857 trades respectively.

Weaknesses of the strategy:

• Capital commitment. The strategy had a relatively high capital commitment compared to other strategies, which was 68%.
  

• The percentage of transactions completed on the same day was 5.5% and according to our research, statistically about 1x a year this can trigger the Pattern Day Trader conditions on accounts below $25k. This requires understanding the mechanisms that follow.

Summary

Since 1994, the strategy has increased capital 15 times more effectively than the benchmark, with only half the drawdown. This shows its exceptional efficiency. Research on nearly 113,880 trades on the Nasdaq 100 and Russell 1000 indices confirms its strong reliability, indicating that the methods used by the strategy are effective and likely to remain so in the future.

What you receive in the package for this strategy:

• The e-book with detailed rules and results for the strategy.

• SQX file 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.