Bollinger Band Squeeze

[SpearPointTrader 10]

Does anyone here play the Bollinger band Squeeze? If so, have you tried using it in conjunction with more basic break out of congestion patterns like 1-2-3, Double Top/Bottom and head & Shoulder patterns?

[Mysticforex 13]

Does anyone here play the Bollinger band Squeeze? If so, have you tried using it in conjunction with more basic break out of congestion patterns like 1-2-3, Double Top/Bottom and head & Shoulder patterns?

 

 

Could you give us a chart. I myself have never been a big user of BB. Would help me understand. Maybe I call a "squeeze" something else.

[SpearPointTrader 10]

If you look how the outer bands come in close together, and then open up, That is a classic Bollinger band squeeze, and a confirmation.

[Mysticforex 13]

If you look how the outer bands come in close together, and then open up, That is a classic Bollinger band squeeze, and a confirmation.

 

So, do you know if price will break to the upside or downside. S&R? or, which side of the middle line price is on ?

[SpearPointTrader 10]

So, do you know if price will break to the upside or downside. S&R? or, which side of the middle line price is on ?

 

Nope. You pretty much have to wait till it starts making the move, and then jump on. Ride it out till the pattern begins to dissolve, and get out. It does allow you to see the move in it's early phases though; and you can see where the real (and often moving) support and resistance is. So you have a better gauge on when to exit the trade.

 

You have to enter, and exit by hand though. Since everything is in a constant state of flux, you can't preplace orders, including Stoploss orders (I still place what I call emergency stops well outside of the trade in case I have a stroke, or heart attack or am prevented from a manual exit some how).

 

The way I play the game, is more like surfing than how most people look at trading. The fact that I cannot use any predetermined parameters, and basically surf the trade as it is in play, is why I can't use the method to trade customer accounts.

 

DISCLAIMER:

THE PRECEDING POST IS STRICTLY HYPOTHETICAL IN NATURE, FOR THE PURPOSES OF EDUCATION AND DISCUSSION *ONLY*

 

THE RISK OF LOSS IN TRADING COMMODITIES CAN BE SUBSTANTIAL.

THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN ATTAINABLE IN COMMODITY TRADING CAN WORK FOR YOU, AS WELL AS AGAINST YOU.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

[CapitalBosters 10]

Squeeze Equation:

Bollinger Band®width = (Top Bollinger Band® (20 periods))-Bottom Bollinger Band® (20 periods)/ Simple Moving Average Close (20 periods)

[SpearPointTrader 10]

Squeeze Equation:

Bollinger Band®width = (Top Bollinger Band® (20 periods))-Bottom Bollinger Band® (20 periods)/ Simple Moving Average Close (20 periods)

 

I actually use the 18 bar SMA for mine. Seems to be more reliable, due to the fact that he 18 day moving average is more widely used.

 

I feel it is like trading a market. You always pick the month with the highest OI and Volume, because the signals are the most accurate due to the traffic trading that contract.

 

The more people trading off of a signal, the more accurate an entry based off of it will be.

 

 

DISCLAIMER:

THE PRECEDING POST IS STRICTLY HYPOTHETICAL IN NATURE, FOR THE PURPOSES OF EDUCATION AND DISCUSSION *ONLY*. IT IS NOT DESIGNED TO PROVIDE ANY INVESTMENT OR OTHER PROFESSIONAL ADVICE.

 

THE RISK OF LOSS IN TRADING FUTURES AND OPTIONS ON COMMODITIES CAN BE SUBSTANTIAL. THEY MAY NOT BE SUITABLE FOR ALL INVESTORS.

THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN ATTAINABLE IN COMMODITY TRADING CAN WORK FOR YOU, AS WELL AS AGAINST YOU.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

[AtHomeTrader 10]

I like the BB Squeeze trade.

 

The way I look at is is to simply measure expansion/contraction volatility cycles. Catching the end of a contraction cycle can be very profitable because when a new expansion cycle begins big profits can potentially made quickly. Nothing works all the time of course, so always use your risk and money management rules.

 

I personally use a momentum indicator on a higher time frame to help me determine the direction of the expansion move.

 

Having said that, it works good for the initial move, but I've seen often where the volatility move will begin in one direction and then turn, and the major move will occur in the other direction!

 

Having traded for many years, and seeing this many times, I just trade bar-by-bar, watch for this in case it occurs, and will do a stop-and-reverse if needed.

 

Suggestion - don't know which charting software you're using, but Bollinger Band Squeezes are so well-known that you may want to search for a free custom indicator that colors that Bollinger Bands when the mathematical requirements for the Squeeze are met. People often post such free indicators on forums (maybe even this one).

 

Wishing you happy trades!

[RichardV2 0]

I agree with all of you. I especially like the surfer analogy. You wait for the big wave and either have the adrenalin ride of your life, or get pounded into the sand with the crash. I have collected about 800 books about the markets, and just last week I slogged through about 50 of them, reading up on just the "Squeeze".

Next to my favorite, a long narrow trading range, the squeeze, although riskier, gets my attention. If I saw one right now, I might use these rules:

1. No touching until the breakout.

2. No purchase or sale without a solid escape plan, i.e. get out immediately during the run back through the trading range.

3. Go through my books again, reading up on the best way to use a trailing stop loss.