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TTM Squeeze Strategy

A powerful volatility-based strategy that helps identify potential breakout opportunities in the market

Strategy Overview

Understanding the TTM Squeeze

What is the TTM Squeeze?

The TTM Squeeze is a powerful trading strategy developed by John Carter that combines volatility and momentum to identify potentially explosive price moves. The strategy is based on the principle that periods of low volatility (consolidation) are often followed by significant price movements.

How Does It Work?

The strategy works by comparing two volatility indicators:

  • Bollinger Bands: These bands are set 2 standard deviations above and below a 20-period simple moving average.
  • Keltner Channels: Similar to Bollinger Bands, but use Average True Range (ATR) instead of standard deviation, typically set at 1.5 times the 20-period ATR.

The Three Key Elements

1. The Squeeze

A squeeze occurs when Bollinger Bands move inside the Keltner Channels, indicating:

  • Extremely low volatility
  • Price consolidation
  • Potential energy building for a breakout
  • Shown as red dots on the price chart

2. The Release

A squeeze release happens when Bollinger Bands expand outside the Keltner Channels:

  • Indicates increasing volatility
  • Signals potential trend beginning
  • Red dots disappear from the chart
  • Direction is confirmed by momentum histogram

3. The Momentum Histogram

The momentum histogram helps determine the likely direction of the breakout:

  • Green bars = Bullish momentum (consider long positions)
  • Red bars = Bearish momentum (consider short positions)
  • Bar height indicates momentum strength
  • Crossing from negative to positive (or vice versa) signals potential trend change

Key Components

Trading Guidelines

  1. Identify Squeeze

    Watch for red dots indicating low volatility and price consolidation.

  2. Monitor Momentum

    Check the histogram color and size to determine potential breakout direction.

  3. Wait for Release

    Enter when the squeeze releases (dots disappear) and momentum confirms direction.

  4. Manage Risk

    Set stops below recent support for longs or above resistance for shorts.

Example Trade Setups

Bullish Setup

  1. Identify a squeeze (red dots appear)
  2. Wait for momentum histogram to turn green
  3. Enter long when squeeze releases (red dots disappear)
  4. Set stop loss below the recent low
  5. Target previous resistance levels or use trailing stop

Bearish Setup

  1. Identify a squeeze (red dots appear)
  2. Wait for momentum histogram to turn red
  3. Enter short when squeeze releases (red dots disappear)
  4. Set stop loss above the recent high
  5. Target previous support levels or use trailing stop

Risk Management Tips

  • Always wait for squeeze release before entering
  • Confirm direction with momentum histogram
  • Use position sizing based on stop distance
  • Consider market conditions and overall trend
  • Be patient - high-quality setups are worth waiting for

Best Practices

  • 🎯
    Timeframe Selection

    Higher timeframes (4H, Daily) typically provide more reliable signals.

  • 📊
    Multiple Timeframe Analysis

    Confirm signals across different timeframes for better accuracy.

  • ⚡
    Market Conditions

    Strategy works best in trending markets after periods of consolidation.

  • 🎚️
    Position Sizing

    Consider larger positions when momentum and squeeze release align strongly.