TTM Squeeze Indicator Explained [Full Trading Guide]

Introduction

The squeeze strategy has been adopted for trading and has been in use for many years. Carter developed the TTM Squeeze indicator. It is currently in use by many top and well-known charting software platforms, such as Thinkorswim and TradeStation.

TTM Squeeze does not only pinpoint moment in time when you can look onward to a “greater than expected move”, but equally works fine and perfectly complements many other trading tools and indicators. “In sum, it’s my favorite” said Carter.

What is TTM Squeeze?

TTM Squeeze is a momentum and volatility indicator that was introduced by John Carter.

The volatility factors of the TTM Squeeze indicator calculate price compression through the application of Bollinger bands and Keltner channels. When Bollinger bands are utterly encapsulated inside the keltner channels that shows a time of really low volatility. This condition is referred to as the squeeze. As soon as the Bollinger bands extend and goes back outside of the keltner channel, the squeeze is regarded to have “fired.” Volatility becomes more and prices are possibly going to break out of that tight trading range in a particular direction.

The on/off state of the squeeze is displayed with tiny dots on the zero line of the indicator. The red dot shows the squeeze is on and the green dot shows the squeeze is off.

TTM Interpretation

The TTM squeez indicator has both volatility and momentum components. The squeeze dots notifies whenever the volatility options are right to buy. The momentum histogram shows the direction (long or short) to trade with.

When volatility marks are low, the squeeze will turn red. Immediately the volatility increases and Bollinger Bands expatiate to the point when they are outside of the keltner Channels, the squeeze has fired and the squeeze dots will turn green. Carter suggests buying on the first green dots after one or additional red dots. The momentum histogram helps to decide the direction to trade with. Whenever momentum is higher than the zero mark and rising (light blue bars), buy long; if the histogram is beneath the zero mark and dropping lower (dark red bars) that shows a chance to go short.

The histogram bars are represented with color codes for easy interpretation and understanding. When bars are higher than the zero mark, they appear in blue but when beneath the zero mark, they are red. Additionally, if a bar is lower than the previous bar, it will have a darker color (dark blue or dark red), and if a bar happens to be above the previous bar, it will have a lighter color (light blue or light red).

What does TTM do?

Traders who are familiar with the TTM Squeeze are aware that Carter has shown it to deliver 75% of the time. Irregardless of where you are as a trader, be it part-timer, new, or even a well-seasoned trader, the TTM Squeeze gives an avenue to help give your trading the right turn around it deserves. You can transform a small investment into a huge asset as proven by Carter. Carter works daily to put other traders through in cases of bull or bear markets. TTM Squeeze serves as a building block indicator to improve trading techniques that do away with risk, target entry and exit points and in turn increases rewards.

The TTM Squeeze is capable of assisting investors to develop a renewed pledge and huge level of confidence to become profitable, by becoming rich steadily. Commitment and confidence will help you to avoid risk, trade to win, do away with negativity and to maximize your profits. This combination might start to look like a whole lot of claims for a single chart indicator. But then, there exist history and more than a decade worth of Carter’s personal statistics behind how efficiently this indicator performs. It has proven itself over and over again as a dependable tool because:

1. It has a 75% or even better winning rate
2. The indicator aids in forecasting massive moves
3. It shows more accurate timing for options trades

How comes the TTM Squeeze works so well?

The TTM Squeeze is no doubt a powerful tool for ideas into market moves because it is a charting signal that has layers of composites.

In order to have a good grasp of why TTM is so efficient and powerful, we would need to dive into the “techy” aspect of this indicator. As mentioned earlier, TTM squeeze is a technical analysis indicator used inside the charting software.

It uses several signals

TTM Squeeze makes use of the following market chart signals:

1. Bollinger Bands: it calculates standard deviation. This expatiate or reduces in relation to the volatility of security price. When bands get contracted, this denotes compression of volatility, and when bands expatiate, it shows an expansion of volatility.
2. Keltner’s Channels: this calculate the average true range (ATR). ATR is the average price range of a stock through a period of certain number of days. That is 14 or 21 days. Whenever Bollinger bands reducers to a state that there are trading in the keltner’s Channel, lookout for a squeeze. An emission of energy is imminent.
3. Momentum oscillator: it calculates the stock price change over a certain time frame duration and helps discover price trend either up or down and a likely energy emission. When the oscillator is higher than zero and going up, it indicates a likely long trade. But when it is beneath zero and coming down, it takes a likely short trade.

By incorporating these tools, you will end up with an overlapping mixture that shows market energy is at the point of emission. This mixture of indicators gives off indications about upcoming market direction. It then tells about the way in which a stock price may follow. Discovering this prospects with the indicators confirms a credible squeeze.

A great indicator for traders

A squeeze occurs rapidly but not often. The market is on the verge of reacting with energy up or down in a fixed manner. Technical investors want to be using trades when stock prices are emitting energy, as opposed to building up energy. The TTM squeeze helps you to exercise patience and to be watchful for golden chances.

This indicator is perfect for the set of traders who are not looking to becoming “helicopter” traders (staring at stock charts on a computer screen all day long). The TTM squeeze has a tangible spillover effect for trailers who mean business of not getting caught or becoming emotional as a result of market news reports. The TTM squeeze not only assist you into the market at the perfect time, but equally debates you from entering during market uncertainty times.

It is paramount for serious minded traders to be aware that you are trading a set up and not the stock. Going after stocks or news on stocks can be very bad. Traders need to get their thoughts right that; here is a setup which is on a stock. I am going to get in and I am equally going to come out. And that I am going to watch out for the next available squeeze on another stock.

Conclusion

The TTM Squeeze has the ability to record the periods when a market is in a state of consolidation. It happens right before a massive move and forecasts the additional direction of that move. TTM is linked to two main indicators namely: Bollinger Bands and Keltner channels.