Mastering the Squeeze Break Indicator for Trading Success

If you’re looking to up your trading game, you might want to check out the Squeeze Break Indicator. This nifty tool is based on a strategy from John Carter’s book, Mastering the Trade, and it’s all about capitalizing on market volatility. The main idea? Markets often shift between periods of low and high volatility, and this indicator helps you catch those moves.

To measure these shifts, the Squeeze Break Indicator employs two well-known tools: Bollinger Bands and Keltner Channels (okay, maybe not everyone’s cup of tea!). Additionally, it uses a Momentum indicator to help establish a trade bias when the Bollinger Bands slip outside the Keltner Channels.

Components of the Squeeze Break Indicator

Green Histogram: A positive green histogram indicates that the Bollinger Bands are outside the Keltner Channels, suggesting the market is trending or becoming volatile. The strength of the histogram correlates with the potential price movement.
Red Histogram: Conversely, a negative red histogram means the Bollinger Bands are inside the Keltner Channels, which hints at market consolidation. A stronger red histogram indicates tighter price action.
Momentum Indicator: This is integrated into the Squeeze Break Indicator. According to Carter’s strategy, you go long when the Bollinger Bands break outside the Keltner Channels while the Momentum indicator is above the zero line. For short positions, wait until the Momentum indicator dips below zero.
Additional Market Info: I’ve included extra indicator information in the top left corner for a broader perspective on current market conditions.
Audio Alerts: The indicator also offers audio alerts for potential breakouts. I find it particularly useful on larger timeframes. However, I usually don’t trade based solely on alerts; it’s more of a handy heads-up for price action shifts and breakout opportunities.

Mastering the Squeeze Break Indicator for Trading Success

Components of the Squeeze Break Indicator

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