TTM Squeeze strategy
When Bollinger Bands contract inside the Keltner Channels, volatility is compressed. Trade the first bar out in the direction of momentum.
Try TTM Squeeze strategy on a real day
A real market day with the date hidden. Run the checklist on the chart, then buy, sell or stay out: the real candles answer.
Check every point of the list before you decide. Stay out if the setup is not there.
John Carter described the squeeze in "Mastering the Trade" (2005). It compares two volatility envelopes: Bollinger Bands (based on standard deviation) and Keltner Channels (based on ATR). When the Bollinger Bands fit inside the Keltner Channels, the market is unusually quiet.
Why it works
Volatility cycles between contraction and expansion. Long compression tends to be followed by a strong move, but the direction is unknown in advance.
The squeeze uses a momentum histogram to choose the side: when the squeeze "fires", trade in the direction of the histogram.
The rules
Setup
- Bollinger Bands (20, 2) inside Keltner Channels (20, 1.5 ATR) for at least 6 bars: the squeeze is on.
- Momentum histogram rising (for longs).
Entry
- Enter on the first close after the Bollinger Bands move back outside the Keltner Channels, in the direction of momentum.
Stop loss
- Beyond the opposite side of the squeeze range.
Exit and management
- Exit when the histogram shows two consecutive weaker bars, or at 2R.
Filters that improve it
- Longer squeezes produce bigger moves; skip squeezes shorter than 6 bars.
- Prefer the direction of the higher-timeframe trend.
Worked example
Illustrative US 100 example on 1H: the squeeze lasts ten bars around 19,400. The bands expand and the histogram turns up. Buy at 19,450, stop below the range at 19,350, exit when momentum fades at 19,640.
Illustrative numbers, not a recommendation.
Common mistakes
- Entering during the squeeze before it fires.
- Ignoring the momentum direction.
How to practise it
In Candlemind turn on Bollinger Bands and add the ATR bands template from My indicators, which works like a Keltner Channel. Mark the bars where the Bollinger Bands fit inside and wait for the release.
Pre-trade checklist
- Bollinger inside Keltner for 6+ bars
- Momentum direction clear
- Entry on the release bar
- Stop beyond the squeeze range
- Exit on fading momentum
Frequently asked questions
What does it mean when the squeeze fires?
The Bollinger Bands move back outside the Keltner Channels: volatility is expanding again.
Is the TTM Squeeze the same as the Bollinger squeeze?
Both trade volatility compression; the TTM version uses the Keltner Channels as the reference.