Bollinger Squeeze

The TTM Squeeze indicator (by John Carter) is popular - it shows squeeze state with dots and momentum with histogram. Alternatively, plot Bollinger Bands (20, 2) and Keltner Channels (20, 1.5) separately on TradingView and visually check if BB is inside KC.

Squeezes can last from a few bars to several weeks. On daily charts, typical squeezes last 5-20 bars. Longer squeezes (15+ bars) often produce larger moves. Very short squeezes (3-5 bars) may be noise. Track duration as part of quality assessment.

Wait for the release. The squeeze identifies the setup (coiled spring), but the trade is entered when the squeeze releases (BB expands outside KC) and direction is confirmed. Entering during the squeeze means you don't know which way it will break.

Trade the actual direction, not your expectation. If you thought it would go up but it releases down (price below 20 SMA, negative momentum), either take the short trade or wait. Never fight the release direction - that's what the indicators are telling you.

Bollinger Bands narrow naturally during low volatility but the question is: 'is volatility unusually low?' Keltner Channels provide a baseline comparison. BB inside KC confirms volatility is below the normal ATR-based average - a true squeeze condition.

Score squeezes by: Duration (+1 per 5 bars), Tightness (BB width percentile - bottom 10% = +2), Timeframe (daily = +2), Trend alignment (+2 if with-trend). Total 5+ is good quality. Very tight, long-duration, daily timeframe squeezes are highest quality.

No - be selective. Focus on higher quality squeezes (longer duration, tighter bands, higher timeframe). Require momentum confirmation. Consider trend alignment. Skipping marginal setups improves overall win rate and profit factor.

Daily timeframe is most common for swing trading squeezes (1-10 day holds). Weekly for longer-term. 4-hour can work for shorter swings. Avoid 1-hour and below as squeezes are more noisy. Higher timeframes = more significant squeezes.

Stop loss is your protection. If stopped out on a false release, accept the loss and don't immediately reverse. Assess why it failed (weak momentum? counter-trend?). Wait for the next clean setup. False releases are expected 30-40% of the time.

Yes, but manage correlation and total risk. Don't take 5 correlated FTSE stock squeezes all long. Diversify across sectors. Limit total risk to 5-8% across all squeeze positions. Track which instruments give best squeeze results over time.

Backtest different combinations: BB periods (15, 20, 25), SD multipliers (1.5, 2.0, 2.5), KC ATR multipliers (1.0, 1.5, 2.0). Compare win rate, profit factor, and number of signals. Choose parameters with robust performance across different periods, not just best backtest.

During squeeze (before release): Long straddle/strangle when direction unclear, capturing any breakout. On release with direction: Directional long call/put. IV is typically low during squeeze (cheap premium) and may expand on release (vega profit). Use 2-4 week expiry.

Daily scan universe for BB inside KC condition. Calculate squeeze duration and BB width percentile. Score by quality criteria. Rank all squeezes. Alert on top-ranked approaching release. Enter on release with appropriate position sizing based on score.

Bull market: Focus on long releases, trail wider, target higher. Bear market: Focus on short releases, take profits quicker. Ranging: Both directions, smaller targets, higher false release rate. High vol regime: Fewer squeezes but bigger. Low vol: More squeezes, smaller.

Skip when: Major news imminent (earnings, Fed), very short squeeze duration (<5 bars), marginal BB inside KC (barely), weak/conflicting momentum, counter to strong higher TF trend, or after multiple recent false releases in that instrument.