Keltner Channel

Keltner uses ATR (Average True Range) for band width; Bollinger uses standard deviation. Keltner bands are smoother and more consistent; Bollinger bands can spike quickly on volatility changes. Use Keltner for trend-following; Bollinger for volatility analysis.

In a Keltner breakout strategy, yes - closing above the upper band is a buy signal. However, in a mean-reversion approach, you'd sell at the upper band. The key is context: in strong uptrends, upper band touches often lead to continuation, not reversal.

Narrowing bands indicate decreasing volatility (falling ATR). This often precedes a breakout. A squeeze (especially Bollinger inside Keltner) suggests a significant move is coming - but doesn't tell you which direction.

Yes, Keltner Channel trading (long positions) is perfectly suitable for TFSA accounts. The strategy involves buying stocks/ETFs, which is permitted in registered accounts.

Stops at the middle EMA can be tight in volatile markets. Consider using 2×ATR below entry instead, or only trade when ADX confirms a strong trend. Also ensure position sizing accounts for normal volatility.

Plot both indicators (Bollinger 20/2, Keltner 20/10/1.5). When Bollinger bands are inside Keltner, a squeeze is 'on'. Wait for Bollinger to expand outside Keltner (squeeze 'off'), then trade the breakout direction. Use momentum (MACD histogram) for direction bias.

Use breakout in trending markets (ADX > 25, clear EMA slope). Use mean reversion in ranging/mild trending markets. In strong trends, don't fade the bands - that's fighting momentum. In ranges, bands act as support/resistance.

Common method: once trade is profitable, trail stop with the middle EMA. Each day, move stop to just below the EMA (for longs). This lets trends run while tightening as the EMA rises.

Standard 2.0 works well for most Canadian stocks on daily charts. For more volatile stocks (junior miners, tech), consider 2.5. For stable blue chips (banks), 1.5-2.0 works. Always backtest on specific instruments.

Yes, common combinations: ADX for trend strength filter, RSI for overbought/oversold context, MACD for momentum confirmation, Bollinger for squeeze analysis. Don't over-complicate - 1-2 additional filters is usually sufficient.

Scan for: recent band breakouts (within 2 bars), EMA slope in breakout direction, ADX > 20, volume > 1.2× average. Rank by breakout strength (distance beyond band) and ADX level. Focus on top-ranked candidates within risk limits.

Track ATR percentile rank over 100 bars. When ATR > 75th percentile, use multiplier 2.5-3.0. When ATR < 25th percentile, use 1.5. Normal range uses 2.0. Alternatively, use ADX: strong trends (>30) use tighter bands; weak (<20) use wider.

Calculate position size inverse to ATR: Position = (Target Risk $) / ATR. Higher ATR instruments get smaller positions; lower ATR get larger. This equalizes expected risk contribution across all positions.

Calculate rolling 30-day correlation between positions. Limit correlated positions (>0.6) to 25% total. When adding new positions, check correlation with existing holdings. Consider sector diversification as a proxy for correlation management.

Win rate 40-55%, profit factor 1.5-2.5, max drawdown 15-30%. Profitability comes from positive expectancy: average win > average loss. Extended losing streaks are normal (5-10 in a row). Drawdowns can persist for weeks/months in ranging markets.