Using the TTM Squeeze Indicator to Identify Market Breakouts

Understanding the TTM Squeeze Indicator

The TTM Squeeze indicator is a powerful tool used by traders to identify periods of low volatility followed by periods of high volatility. It was developed by John Carter, a well-known trader and author. The indicator is based on the concept of Bollinger Bands and Keltner Channels, and it helps traders anticipate potential breakouts in the market.

How to Use the TTM Squeeze Indicator

1. Install the Indicator

The first step in using the TTM Squeeze indicator is to install it on your trading platform. Most platforms, such as Thinkorswim or TradingView, offer this indicator as a built-in tool. If not, you can find the indicator code online and add it to your platform.

2. Interpret the Squeeze

When the TTM Squeeze indicator shows a squeeze, it means that the Bollinger Bands are inside the Keltner Channels, indicating low volatility. This is a signal that a breakout is imminent, and traders should be prepared for a potential move in the market.

3. Watch for the Release

As the market prepares for a breakout, the TTM Squeeze indicator will show a release, indicating that the Bollinger Bands are expanding outside the Keltner Channels. This is a signal to enter a trade in the direction of the breakout.

4. Set Your Stop Loss and Take Profit

When using the TTM Squeeze indicator, it is important to set your stop loss and take profit levels to manage your risk. Since breakouts can be volatile, it is crucial to have a plan in place to protect your capital.

Conclusion

The TTM Squeeze indicator is a valuable tool for traders looking to identify potential breakouts in the market. By understanding how to use this indicator effectively, traders can improve their trading strategies and increase their chances of success. Remember to always practice proper risk management and use the TTM Squeeze indicator in conjunction with other technical analysis tools for the best results.