consolidation or vertical price discovery. By identifying these calm periods, we have a better opportunity of getting into trades
with the potential for larger moves. Once a market enters into a “squeeze,” we watch the overall market momentum to help forecast the
market direction and await a release of market energy.”
The StdATR Squeeze Channel combines standard deviation and average true range channels
and email/message alerts to improve on the Bollinger band squeeze play. This is a great pattern that enables you to locate strong and
profitable trade setups, and works on all time frames.
When the market slows, low volatility draws standard deviation bands inside the average true range channel (“squeeze”). Afterward, the
release of a squeeze precedes a strong price movement, which can be very profitable if entered on time. This setup is great because the strong
movement usually allows a tight stop loss and a wide target – in many cases a 1:10 SL to TP position is reasonable, i.e., great risk-to-reward
ratio.
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The key to the squeeze setup is
entering on time, which is where StDATR Squeeze Channel excels. It clearly and
quantitatively shows a squeeze onset and release, by comparing standard deviation to average true range channels. This is more robust,
easier to use, and allows better entries than simple Bollinger bands, which would require you to estimate a squeeze onset/release. We have
added
email and message alertsto help you track multiple assets and enter on time.
This indicator is particularly well suited for traders who currently use Bollinger bands, and/or enjoy squeeze plays.
- StDev bands inside ATR bands marks a ‘squeeze,’ and indicates a likely major upcoming price movement. The space between StDev and ATR
bands indicates headroom for directional movement. Wait for squeeze that lasts more than 4 candles using
squeeze channel.
- When squeeze is released, trade in the direction of price movement
- Color Scheme: Select from one of the three pre-set color schemes, or choose “UserDefine” to enable defining your own colors
(in Colors tab) - StDATR: Plot StD/ATR channel squeeze: True=plot squeeze channel
- StDATR: Channel Period (Default=34): # bars used to calculate channel
- StDATR: Channel Shift (Default=0): Shifts channel N bars forward ( value) or backward (- value) in time
- StDATR: Channel Deviations (Default=2.5): # stdev from the mean for calculating StD channel
- StDATR: Squeeze release alerts: True=alerts when squeeze is released
- StDATR: Turn on alerts message: Alert triggers a message box
- StDATR: Turn on alerts sound: Alert triggers a sound
- StDATR: Turn on alerts email: Alert sends an email (SMTP must be set up in MetaTrader options)
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