Switch Stats
A day trader named John Carter made over $18 million in one year by using an indicator he created called TTM Squeeze. It allows traders to know when breakouts will occur by showing the relationship between Bollinger bands and Keltner channels. The TTM Squeeze indicator indicates the momentum and volatility of the market, with a Momentum histogram and a Zero line that plots red or green dots. The most common way to enter a position using the indicator is waiting for several red dots to be plotted, indicating that the market is squeezing, and then for a green dot to print. A bullish momentum above zero shows a good time to long the market while a bearish momentum below the zero line shows a good time to short the market. There are other methods to read the indicator, such as TTM Squeeze divergence trading, which utilizes the divergences between the histogram and the price action.
Mastering The TTM Squeeze Indicator For Profitable Trades
Introduction
John Carter, a highly successful day trader since 1996, has made over 18 million dollars in a single year from trading the market. He also became a best-selling author with his book, Mastering the Trade. One of his strategies that made him this successful was the use of a unique indicator called the TTM Squeeze. In this article, we will go over the TTM Squeeze Indicator, how it works, and how to use it effectively to make profitable trades.
What is the TTM Squeeze Indicator?
The TTM Squeeze Indicator was created by John Carter to help him make extremely profitable trades. It is designed to identify when breakouts will occur, allowing traders to catch large price movements before they happen. The indicator reveals the relationship between the Bollinger bands and the Keltner channels. When the Bollinger Bands move inside the Keltner Channels, it signals a period of low volatility, and a breakout is likely to occur soon. This narrowing of the Bollinger Bands within the Keltner Channels is known as a squeeze.
Adding the TTM Squeeze Indicator to Your Chart
Adding the TTM Squeeze Indicator is easy. Simply go to the indicator search tab and search for the TTM squeeze indicator. Select the indicator made by drecken and add it to the chart. Now change the indicator settings to optimize it for the strategy. Click on the indicator settings tab and navigate to the style settings, then change the color of the indicator to make it easier to see.
Understanding the TTM Squeeze Indicator
The indicator is made up of two components: the Momentum histogram and the zero line. The Momentum histogram is a smoothed momentum oscillator used to indicate the possible direction of the breakout. Whenever the lines are blue and above the zero line, it indicates that there is positive momentum in the market. If the lines are grey and below the zero line, it indicates that there is negative momentum in the market.
The zero line plots red or green dots. If the dots are red, it indicates that a squeeze is occurring. The TTM Squeeze indicator is designed to show the volatility and momentum of the market. The bars on the histogram grow taller when the Bollinger bands move outside of the Keltner channel, indicating a high amount of momentum entering the market.
Reading the TTM Squeeze Indicator
To determine the direction of the breakout and the exact entry point, traders look at the TTM indicator. In this case, if the Bollinger bands are being squeezed into the Keltner channel lines, the bars of the histogram will be very short, indicating a period of low volatility in the market. Conversely, if the Bollinger bands move outside of the Keltner channel lines, the bars on the histogram grow taller, indicating high volatility in the market.
If there are several red dots on the zero line, it shows that the market is currently squeezing, and there is a high chance of a breakout occurring on the next green dot. The direction of the breakout is determined by looking at the momentum oscillator. If the histogram is blue and above the zero line, it indicates that bullish momentum is entering the market, and if the histogram is grey and below the zero line, it shows that bearish momentum is entering the market.
Entering into Positions Using the TTM Squeeze Indicator
The most common way traders using the TTM indicator is by first observing the zero line. If several red dots are plotted on the chart, it shows that the market is squeezing. When a green dot is printed, it indicates that the squeeze has been released, and the Bollinger bands are expanding outside of the Keltner channel lines. Traders enter into long positions if the histogram is blue and above the zero line and set the stop-loss at the recent swing low.
However, there are also times when the market doesn’t respect the squeeze, and traders must look for other ways to read the indicator. This is where TTM Squeeze divergence trading comes into play. The method utilizes the divergences between the histogram and the price action to determine the future direction of the price.
TTM Squeeze Divergence Trading
Divergences between the histogram and the price action can show the strength of the trend and when it might end. A bearish divergence occurs when the histogram makes lower highs while the price action makes higher highs. This results in a bearish reversal. A bullish divergence happens when the price makes lower lows, while the individual waves on the histogram make higher lows. This indicates a bullish reversal.
Conclusion
The TTM Squeeze Indicator is a powerful tool that can help traders make profitable trades by identifying potential breakouts. It is essential to understand the indicator’s components and how to read it before using it as a trading tool. While history shows its effectiveness, it is vital to note that no strategy is foolproof, and traders must always use risk management tools when entering into positions.
