Submit by Janus Trader 26/08/2013
This Trading Method Sqeeze Breakout was created to trade on stock markets and commodities at the Daily Time Frame.
Squeeze Break MA Forex Trading Strategy
I think that for forex market is good also by 30 min. ime frame.
Time Frame 30 min or higher
Different parameters in the Bollinger Band can be adjusted such as the period of the simple moving average and the number of standard deviations used.
Use parameters that are usually the standard default setting. Bollinger Bands: Length 20, Standard Deviation, 2 Now, the statistical term that you don’t commonly hear in normal conversation is “standard deviation.” Understanding this term is the key to understand how a Bollinger Band detects and displays fluctuations in the degree of volatility.
In plain English, standard deviation is determined by how far the current closing price deviates from the mean closing price. The formula for computing standard deviation is rather complex and I’m running the risk of oversimplifying (and offending math Phds) but the general concept is that the farther the closing price is from the average closing price the more volatile a market is deemed to be.
A Trading Method with Bollinger Bands and Keltner Channels
And vice versa. That is what determines the degree of contraction or expansion of a Bollinger Band.
When a Bollinger Band Squeeze is formed wait that upper Bollinger Band crosses upward upper Keltner Channel and wait that the price broken the upper band for entry long.
When a Bollinger Band Squeeze is formed wait that lower Bollinger Band
crosses downward lower Keltner Channel and wait the price broken the lower band for entry short.
At point 1 the Red arrows are indicating a Bollinger Band Squeeze.
Master the TTM Squeeze Indicator on Thinkorswim
At point 2 the Red arrows are indicating another Bollinger Band Squeeze. What’s hard about this situation is you do not know how to qualify this squeeze.
Squeeze Play Breakout in Forex Market
What we need to do is to quantify how narrow is narrow so that you can determine when a potential trade is triggered. The way we do this is to add the Keltner Channel to the chart.
In chart 2 now that we have the Keltner Channel overlaid on top of what you saw in Chart 1, we can qualify the Squeeze.
You only take a squeeze play that meets the following criteria: You only consider taking a squeeze play when both the upper and lower Bollinger Bands go inside the Keltner Channel. Points 1 and 2 show examples of the Bollinger Bands (blue lines) going inside the Keltner Channel (Red lines).
At those points, you know the squeeze has started. When the Bollinger Bands (BOTH blue lines) start to come out of the Keltner Channel (red lines) the squeeze has been released and a move is about to take place.
24# Squeeze Breakout
Bollinger Bands and Keltner Channels tell you when a market is transitioning from low volatility to high volatilty. Using these two indicators together is a valuable technique in itself and I would imagine that some of you would be able to make use of it.
In additional of this 2 super indicators, add momentum + Volumn and apply the knowledge of candlestick will further enchance your power in Squeeze Play Breakout.
Squeeze Breakout: Template and indicators for MT4 plataform.
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