Trend-Filtered Volatility Squeeze Breakouts with Tiered Exits

Summary

This swing-trading approach seeks long entries in established uptrends after recent price ranges contract. Its trend template requires price and moving averages to align bullishly, with the long-term average rising. A squeeze is identified by a low percentile rank for the recent high-low range or a narrow closing-price range; the two tests are combined with an OR condition. An optional volume filter checks for activity above a moving average, and a stop-entry order is placed at a prior recent high when the setup is active.

The position uses a percentage stop and three profit targets, with portions assigned to each target. The document describes configurable rules and suggests evaluating the strategy on liquid instruments and across market regimes. It provides no performance results, so it offers no evidence that the rules are profitable. The squeeze model is explicitly simplified: it does not identify the sequence and depth of multiple contractions associated with a full VCP method. Backtests may also differ from live trading because of gaps, spreads, slippage, commissions, and parameter overfitting.

Key ideas

• The strategy filters long breakout setups through bullish alignment and rising longer-term moving averages.
• It detects contraction using either a low historical percentile of recent high-low ranges or a tight closing-price range.
• An optional volume condition confirms that activity exceeds its moving-average baseline.
• A stop-entry order above a recent high seeks to enter when price breaks out of consolidation.
• The position is managed with a percentage stop and staged profit targets, but no performance evidence is supplied.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.