Trading Squeeze Releases with a Bollinger Band Power Oscillator
Summary
This strategy seeks directional moves after volatility contracts and then expands. It detects a squeeze when Bollinger Bands sit inside Keltner Channels, records the release, and permits entries only for a configurable period afterward. A bull or bear power oscillator tracks how much price has pushed beyond its own Bollinger envelope; a threshold crossover in either measure triggers a long or short entry when no position is open.
Initial stops are set using ATR, while position size is calculated from a chosen fraction of equity and the stop distance. The strategy can move the stop to breakeven after price advances a set portion of initial risk, trail it with ATR, exit at a risk-reward target, or close after a maximum holding period. The document describes configurable filters and management rules, but gives no performance statistics or comparative tests. Its suggested tuning guidance is qualitative, and results may vary with market, timeframe, transaction costs, and execution assumptions.
Key ideas
- A squeeze is defined by Bollinger Bands contracting inside Keltner Channels, with entries restricted to a window after release.
- Long and short entries follow threshold crossovers in separate bull and bear power measures.
- ATR stop distance determines both initial risk and position size relative to equity.
- Stops can shift to breakeven and then trail, while a target and maximum holding period provide exits.
- The document offers no quantified evidence that the combined filters produce an edge.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.