I don't know how many of you are familiar with the Trade the Markets Squeeze indicator but it is designed to take advantage of the quiet periods in the market when volatility has decreased, and the market is building up energy for its next major move higher or lower. The decreased volatility and quiet period are when the Bollinger Bands are "squeezed" inside of the Keltner Channels. The setup is triggered when the Bollinger Bands shoot back outside of the Keltner Channel. Depending on the momentum direction, the play can be short or long.
This indicator is used by John Carter and was created by his trading partner Hubert Senters. I really like this indicator and find that during trending markets it works quite well. The caveat is that it isn't free. It can be bought on the tradethemarkets website for around $500. The great thing is I just wrote the indicator myself over the last 2 hours and am currently using it on my charts. It was easier than I thought. I looked at previous videos from Carter and Senters to compare their Squeeze indicator to mine and they are very close. As far as momentum is concerned, they use a combination of ATR, Momentum, a Linear Regression Plot, and moving averages. Mine only uses Momentum and MACD at the moment until I kind find out how to combine indicators to represent momentum.
Here is their Squeeze indicator:
Here is mine:
These are not the same charts but you get the idea. The red dots indicate that the Bollinger bands are inside the Keltner channels and all is quiet. The next green dot after a red is when you go short or long depending on the momentum.
You can read more here: Volatility Squeeze Play
The Forex Project Squeeze isn't perfect but I like what I see so far. If anyone is greatly interested in this indicator or have ideas on how to enhance it, let me know. If you use esignal and you want to try it, it's free.
THIS INDICATOR HASN'T BEEN MAINTAINED SINCE 2006. USE AT YOUR OWN RISK. IT'S ONLY AVAILABLE FOR ESIGNAL DON'T ASK FOR IT FOR ANY OTHER TRADING PLATFORM. YOU CAN DOWNLOAD IT AT:
http://www.forexproject.com/forex_documents
I've received many requests for my version of the TTM Squeeze Indicator. I can't technically call it the TTM Squeeze Indicator because it doesn't have the exact functionality as the indicator that costs $300+. Specifically, the difference isn't with the actual squeeze indication because that is exact. The difference is with the corresponding momentum histogram. While my momentum histogram provides the same trading direction as the TTM proprietary Squeeze indicator (bullish or bearish), it may not provide the smoothing characteristics that seem inherent in their momentum histogram. So my indicator will provide you with the exact functionality as the TTM Squeeze Indicator for SQUEEZE indication and entry direction. What it won't provide exactly is momentum change for exit. They recommend that you exit when the momentum oscillator starts weakening. I would recommend the same but I cannot say for sure that their momentum oscillator is any better than using the MACD or Momentum indicators for exit. From my experience, it is best whether your using the TTM or my squeeze indicator to get additional confirmation for exit.
