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Trade the Market Squeeze, also known as TTMS, is a histogram whose calculations are based on the functioning of two standard Forex indicators, Bollinger Bands and Keltner Channel. This indicator is used to determine the current trading zone and open trades during the presence of a certain trend. It is presented in the bottom the price chart window in the form of a colored histogram, with a level of 0, which, in turn, is also painted in a certain color when it is possible to open a certain trade. Taking into account the histogram indicators, it can be easily determined the direction of the current market movement and opened trades in the same direction.
The Trade the Market Squeeze indicator is suitable for use on any timeframe with any currency pairs.
Input parameters
There are several sections in the settings of the TTMS indicator, each of which affects the overall functioning of the indicator. The Input Parameters section affects its technical operation, the Colors section for its color gamut and value thickness, and the Levels section for adding additional signal levels to its window.
- BB period - period of the Bollinger Bands indicator. The default value is 20.
- BB deviation - the current deviation of the values of the Bollinger Bands indicator from the standard. The default value is 2.0.
- Keltner period - value of the period of the Keltner Channel indicator. The default value is 20.
- Keltner smooth period - Keltner Channel indicator values smoothing period. The default value is 20.
- Keltner smooth method - type of smoothing of Keltner Channel values. Default is Simple.
- Keltner deviaton - deviation of Keltner Channel indicator values. The default value is 2.0.
- Signal label size - the size of the label that displays the signal. The default value is 1.
Indicator signals
With signals and trading using the TTMS indicator, everything is very simple. To open a certain trade, all the necessary indicator conditions that form a signal combination are taken into account first. That is, the direction and color of the histogram will determine the current direction of the market, if it is ascending, long positions are opened, if it is descending, short positions are opened. If the color of the level line will affect the trend zone, if it is positive, trades are opened, and if it is negative, they are temporarily suspended. Any trades should be closed upon receiving the opposite conditions from the indicator.
Signal for Buy trades:
- At least three bars of the histogram have a color with a growth value and are located above level 0 in ascending order. The indicator line indicates a positive zone.
When a full combination of such conditions is received on a signal bullish candle, a buy trade can be opened. Close such a trade after receiving the opposite conditions, and it happened when the line color changed or when at least one histogram column with a different color was formed. At this moment, it can be considered the opening new trades due to a possible change in the current market movement.
Signal for Sell trades:
- The histogram of the indicator should also be above the 0 level, while its columns should have a color with a growth value. It’s line indicates the positive zone.
A sell trade can be opened immediately upon receipt of such conditions on a signal candle. It is recommended to close it if the direction of the current trend is likely to change, that is, when the color of at least one bar of the histogram changes or when the color of the indicator line changes.
Conclusion
The Trade the Market Squeeze indicator is a very effective trading algorithm, while the risk of false signals increases if it is not used additional filters, advisers and indicators. Also, to improve the quality of trading and the ability to correctly apply the indicator, preliminary practice on a demo account is recommended.
You may also be interested The RSI Dual Arrow Trading Indicator for MT5
