Bollinger Squeeze

Most platforms have either built-in or custom squeeze indicators. TradingView has multiple squeeze indicators in the public library. thinkorswim has TTM_Squeeze. TradeStation has the original TTM Squeeze. Many platforms allow you to manually plot Bollinger Bands and Keltner Channels to identify the squeeze visually.

Frequency depends on the timeframe and instrument. On daily charts, you might see 2-4 squeezes per year on major stocks. On intraday charts (15-min, 1-hour), squeezes occur more frequently - Perhaps weekly. Volatile stocks squeeze less often than stable stocks.

Squeezes work on any liquid instrument - Stocks, ETFs, futures, forex. More liquid instruments (SPY, QQQ, AAPL, ES) tend to have cleaner squeeze signals. Avoid low-volume stocks where the squeeze may be noise.

Sometimes squeezes can last for extended periods before firing. If a squeeze lasts unusually long (20+ bars), the eventual breakout is often very significant. However, you don't trade until it fires. Patience is required - Wait for the signal.

The squeeze is somewhat leading - It identifies conditions before a breakout occurs. However, you wait for the squeeze to fire (confirmation) before trading, so there's an element of lag. The momentum indicator helps time the entry.

TTM Squeeze (John Carter's version) uses specific settings (BB 20,2.0 and KC 20,1.5) and includes a momentum histogram for direction. 'Regular' squeeze might just compare BB and KC without the momentum component. TTM Squeeze is a complete trading system; generic squeeze is just the identification.

The standard settings (20,2.0 / 20,1.5) work across timeframes. However, some traders use shorter periods (10-period) for intraday and longer periods (50-period) for position trading. Test different settings for your specific use case, but the standards are a good starting point.

If momentum is very close to zero, direction is unclear. Best to wait until momentum clearly chooses a direction (gets further from zero). Near-zero momentum fires are higher risk. Some traders skip signals where momentum is within a small threshold of zero.

If the squeeze fires but price immediately returns into squeeze (re-squeeze), the breakout failed. Exit the trade. You might wait for the next fire. Sometimes a failed fire leads to a move in the opposite direction - Watch for counter-squeeze setup.

Yes! Squeeze works well combined with: Support/resistance (fire near key level), trend direction (trade with higher TF trend), sector analysis (strongest sectors), and patterns (squeeze inside a flag or triangle). Multiple confluence increases probability.

Steps: (1) Code squeeze detection (BB inside KC). (2) Scan for active squeezes across your universe. (3) Track squeeze duration in real-time. (4) Alert when squeeze fires with momentum direction. (5) Rank fires by duration, bandwidth, momentum strength, volume. (6) Execute top-ranked signals. Automate as much as possible.

For directional: Long calls/puts slightly OTM with 2-4 weeks expiration. For uncertain direction: ATM straddle or OTM strangle. Key: Buy options during squeeze when IV is low; benefit from IV expansion. Consider debit spreads if IV is not extremely low to reduce cost.

Use walk-forward optimization: Optimize on Period 1, test on Period 2, repeat rolling forward. Optimal parameters should be stable across periods. Test nearby parameters - They should perform similarly (robustness check). Avoid highly specific parameters that only work in narrow date ranges.

Classification (Random Forest, XGBoost) predicting binary success (1x ATR move in direction within N bars). Features: Duration, bandwidth, momentum, volume, trend context. Use probability threshold (>60%) for trade filter. Size by probability. Walk-forward validate monthly.

Indices (SPY, QQQ) have cleaner squeezes due to diversification - Less company-specific noise. Individual stocks may have more dramatic moves but also more false signals. For indices: Standard settings work. For stocks: Consider screening for high relative volume and liquidity. Sector squeezes can combine both approaches.