TTM Squeeze Indicator Guide for MT4/MT5
The TTM Squeeze indicator for MT5, introduced by John Carter, is a volatility-based indicator that can also be used as a trend indicator. Many forex traders use it to identify the market direction and strength of momentum.
The TradingView TTM Squeeze indicator shows when a financial instrument is likely to change from a trending market to a range-bound market, and vice versa. It can also indicate promising entries and exit points. Overall, the MT4 TTM Squeeze indicator is a helpful tool for traders in all financial markets, including forex, crypto, and stocks. It can help traders to exercise patience and to be watchful for great opportunities.
In this guide, we will explain all the details related to this indicator.
TTM Squeeze Indicator FAQ
What is TTM Squeeze indicator ?The TTM Squeeze is a valuable technical indicator for all financial market investors. It is known for creating a simpler trading approach based on common fundamentals. Its main concept is that price contraction usually leads to a significant price expansion. The primary function of the TTM Squeeze strategy is to indicate when a contracting market can expand into a trending market. This information allows traders to take advantage of directional movements and identify their entry and exit points with more accuracy. Regardless of the timeframe, market, or type of trader, properly using the TTM Squeeze strategy can add a significant amount of information to chart analysis.
Since multiple reports indicate that most financial markets are usually in range conditions (roughly 80% of the time). The other 20% of the time, markets manage to make significant moves up and down. Consequently, traders seek to early identify those moves and make positions before it takes off.
To explain more, as a volatility and momentum indicator that represents a combination of three technical indicators the Bollinger Bands, the Keltner Channel, and a momentum oscillator. The ttm squeeze indicator shows when an asset tends to shift from oscillating (choppy) conditions to one with a tendency. and vice versa. Therefore, this MT4 ttmsqueeze indicator identifies high probability junctures in time for more significant than expected moves.
How does it work ?
Right now, let’s dive into details and try to understand how to use the MT5 ttm squeeze indicator. For this reason, we should first understand how the indicator works. Thus, as we mentioned earlier, this MT4 analytical indicator represents a mixture of three indicators which makes it a multi-component instrument. The first two indicators are the Bollinger Band and the Keltner channel. Which are responsible for triggering the first component of the MT5 ttm squeeze indicator “the dots”. Hence, at this point, two cases may occur depending on the movement of both indicators:
– When the BB lines are inside the Keltner channel envelopes. Then, we are in a period of very low volatility. Thereby, the market is in a “squeeze” situation which reflects a contraction phase. So, we will state “Red dots” across the neutral line of the ttmsqueeze indicator.
– On the other hand, once the BB lines expand and move beyond the Keltner channel bands, the dots of the Tradingview ttmsqueeze indicator will turn “green”. Pointing that the state of squeeze and the compression phase has ended.
As a result, we can define the first element of the ttm squeeze indicator Tradingview as follow:
Are directionless points that represent merely an indication of the current price movement. Therefore, depending on their color, we can predict if the market will continue squeezing or if an explosive move in price may happen.
The second component of the ttmsqueeze indicator is the histogram which is reflected by a momentum oscillator. Thus, when the bands of the BB indicator move outside of the Keltner channel lines. It indicates that there is no more squeeze condition in the market. So, in order to determine the upcoming direction of the move, whether up or down, we should check the momentum (the MT5 ttm squeeze histogram). Hence, we will identify a long squeeze if the angle of the histogram bars is positive. Then, it means that we should expect an increasing momentum in the market. Otherwise, negative histogram bars will indicate a short squeeze that results in a future decreasing momentum. In consequence, we can describe the second element of the ttmsqueeze indicator as follow
Is a series of bars that indicates the current momentum. Thus, depending on the position of the bars compared to the zero-line, we can predict the next price direction.
TTM Squeeze settingsActually, most traders use the default parameters of the ttm squeeze indicator. Nonetheless, setting up this indicator does not require advanced knowledge. That is why we can easily modify it to fit our needs. The image below displays what will be plotted on the chart if we use the default inputs. Yet, we can customize the MT4 ttm squeeze by adjusting its different variables like; -BB period: represents the number of bars you want to use when calculating the ttm squeeze indicator. -BB deviation: represents the standard deviation of the indicator. -Keltner period: denotes the number of bars you want to use to calculate the indicator. Also, we can customize the colors of the dots as well as the histogram bars.
How to trade with the TTM squeeze ?
In fact, it is simple and easy to understand how to trade using the MT5 ttmsqueeze indicator. In a way, this tool doesn’t just help traders to get into the market at an opportune time by showing specific triggers and entry points. It also helps to keep them out when they need to avoid market uncertainty.
All we need to know about the manner of getting signals from this indicator is that:
- The red and green dots running along the horizontal line (the zero-line) can help traders by indicating if there is a squeeze. To explain, red dots reflect that the price is squeezing. While green dots appear when there is no squeezing condition.
- In the other part, the momentum oscillator is represented by a vertical histogram which provides the potential direction of the price. Thus, an increasing histogram above the neutral line favors a future up tendency. Contrary to a falling histogram below the zero line that favors a downward tendency.
However, to efficiently use the ttm squeeze indicator for MT4 and capture strong signals, we should follow some simple steps:
– Try to identify if the asset is in a squeeze or not by analyzing the price chart and the color of the dots.
– Examine the direction and the position of the bars on the ttm squeeze’s histogram.
– Check the power of the squeeze to confirm the strength of the movement.
TTM Squeeze Signals
Hence, by combining all the steps we can conclude that the Tradingview ttmsqueeze indicator delivers two main indications:
- Green Dots + Rising Momentum above the 0-line = Buy Signal
- Red Dots + Declining Momentum below the 0-line = Sell Signal
As a result, we will improve the chance of embarking on a successful trade. However, most traders believe that the opportune time for carrying out a trade would be as soon as the dots turn from green to red or vice versa. Moreover, once the squeeze starts, it usually lasts for 8 or 10 bars on average. For instance, if we use a 5-minute chart, the squeeze condition will persist for at least 40 minutes (5 * 8 = 40).
Download TTM Squeeze indicator for MT4
The ttm squeeze indicator for MT4 is a practical tool for chartists using Metatrader 4. In fact, by pinpointing consolidation areas in the chart, this indicator will allow traders to make profits as soon as a significant movement in the market takes off. However, many investors prefer to use the divergence on the ttm squeeze MT4 indicator. In this case, a divergence takes place when the histogram bars move towards or away from the 0-line while the price action moves in the opposite direction.
Hence, a bearish divergence occurs when the price makes higher highs, but the histogram bars of the MT4 indicator are making lower highs above the neutral line. Inversely, a bullish divergence happens when the price creates lower lows, but the histogram bars are making higher lows on the negative side of the zero-line.
Download TTM Squeeze indicator for MT5
TTM squeeze indicator in MT5 is an extremely straightforward and useful analytical instrument in Metatrader 5 that will help all kinds of investors to spot and visualize momentum changes and incoming volatility through a clean display of the chart. To illustrate, by relying on the squeeze dots of this MT5 indicator, we can signal important breakouts in the market after consolidating in a tight range for a remarked period. Moreover, we can check the histogram to determine the potential direction of the breakout.
The Tradingview ttm squeeze indicator represents a great technical instrument that combines volatility and momentum factors. In other words, it helps traders not only in spotting market consolidation but also indicates low volatility conditions (the squeeze dots). The MT5 ttm squeeze indicator helps also identify the forex direction in which we should trade (the histogram). Hence, This MT4 indicator offers the chance to make important profits especially when we use it in conjunction with other tools.