How to use the TTM Squeeze
Have you ever wondered how traders get into a stock right before it makes a huge move? Most people who are not traders attribute it to luck, but there’s much more to that than just being lucky. In reality, it’s all about the indicator. Indicators are essential technical analysis tools that traders use in the market.
If you are a trader looking for a free indicator, you won’t find anything better than the TTM_Squeeze indicator. The TTM_Squeeze can find some of the most explosive moves in the market. The traders who brag about finding those crazy explosive moves most likely use the TTM_Squeeze. So, let’s get into what the TTM_Squeeze is and how a trader like yourself can use it and change the way you trade.
What is a Squeeze?
There are two types of squeezes: a short squeeze and a squeeze in and a stock price is consolidating before making its next move, which can be seen on the TTM_Squeeze indicator.
A short squeeze is when a stock is under market pressure caused by traders shorting their positions in that stock. While the stock is underpricing pressure from short positions, a news event or rumor can cause prices to rise rapidly, squeezing shorts out of their positions.
A squeeze in the TTM_Squeeze indicator reveals when a stock consolidates or rests before it makes its next big move. The TTM_Squeeze was created to find unique moments in time where a stock is building up energy to make an explosive move.
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What is the TTM_Squeeze?
The TTM_Squeeze is an indicator created by John Carter himself, the founder of Simpler Trading. He created the indicator using the three critical components listed below, which have helped him identify some of his most successful trades. Think of a squeeze like a rubber band; a rubber band is elastic and is made to stretch past the original diameter of its function. Pull the rubber band too far, and it snaps. It’s normal for stocks to move up, down, and sideways. But if it’s stretched sideways without any energy being released, it will snap. The same thing happens to stocks in a squeeze.
There are two free indicators that are incorporated into the TTM_Squeeze signal: Keltner Channels and Bollinger Bands.
Keltner Channel
The Keltner Channel is a volatility component of the TTM_Squeeze, which can help traders identify trends within their position. All Keltner channels have three trend lines to assist the trader. The middle line is the Exponential Moving Average (EMA) associated with the stock price. The top and bottom trend lines are the Average True Range (ATR). When using the Keltner Channels on their own, John Carter prefers to set the ATR to +2 and -2, with the middle line set to 21-period EMA. He also likes to add three sets of Keltner Channels, at 1, 2, and 3 ATR in order to time exits and entries.
