Elastic Expansion (Bollinger Bands)

Overview

The Elastic Expansion strategy or Bollinger Bands Strategy is an advanced market making approach that uses statistical calculations to identify a range of possible prices for an asset in the next period. By leveraging moving averages and volatility measures, this strategy helps determine the optimal range for liquidity positions, adapting to market conditions and potential price fluctuations.

Ideal Applications

In some instances this strategy can be effective in higher volatitliy token pairings when configured appropriately.

This strategy requires candle data to operate, ensure there is a reliable data source for the candles for proper execution.

Use Cases

Positions adapt to a moving average with volatility‑based bands. Liquidity concentrates within the band to capture fees while reducing exposure to extreme moves.

Key Features

• Dynamic Range Calculation

• Volatility-Based Position Sizing

• Adaptive to Market Conditions

• Customizable Parameters

This strategy has rebalance trigger support and liquidity curve support.

Strategic Advantages

• Enhanced Market Sensitivity

• Optimized for Various Volatility Levels

• Potential for Capturing Short-Term Price Movements

• Risk Management through Statistical Boundaries

Technical Explanation (Essentials Only)

Bands are formed from an SMA and recent standard deviation; ranges widen as volatility rises and narrow as it falls.

Notes

• Requires reliable candle data

• Works best for assets with consistent trading history