The term squeeze describes when folks are taking profits, realizing losses, and finding it impossible to get credit. Thanks to market psychology, these situations come with a feedback loop in the stock market that worsens the situation. Some of the common types of stock squeezes include:
- Short squeeze: it’s a common occasion where the share’s price increases resulting in its buy volume spikes. The spikes are triggered by short sellers cutting their losses by exiting their positions.
- Long squeeze: it takes place in a strong market when the price drops and traders who had gone long sell part of their position. This forces other long-holders into closing their positions to protect themselves against a loss. It happens when you place a stop-loss order to control risk.
- Bear squeeze: this occurs when investors purchase back some stocks are a high price than what they sold them for, thanks to rising prices.
For more on squeeze stock meaning and TTM squeeze day trading, please read on.
How to read TTM squeeze?
TTM squeeze is an exceptional indicator that uses the Keltner channel and Bollinger bands of a stock to determine when the market changes to a trend. It functions by looking for when Bollinger bands cross to the Keltner channel’s realm. Plus, it can help you under squeeze stocks meaning.
The period when an asset’s volatility moves to its average value is the squeeze meaning stocks. It confirms when the stock’s volatility will increase. Therefore, you can get huge profits by timing your market exits and entries. The TTM squeeze’s main components include:
- TTM squeeze histogram: it shows whether the value of the stock is moving in downward or upward momentum. When the lines of the histogram go over the 0-line, you should expect an upward momentum and vice versa.
- Green and red dots stretching along 0-line: these dots are Keltner channel and Bollinger Bands’ reading on a certain asset. When the Bollinger band is traveling in the Keltner channel, then the stock is referred to as squeeze, represented by red dots. But, if it moves outside the Keltner channel, ‘s dots turn green, showing that the market has just fired.
When examining the squeeze and recognizing the red dots are changing color while the bars are showing an uptrend, then you should go long. But if the bars are showing a downward trend, then you should go short.
Squeeze Pro Indicator: Finding Your Trading Strategies
Squeeze is a unique directionless indicator that features dots on a 0-line. A simpler trading squeeze pro shows signs of an upcoming explosive move; therefore, the higher the compressions, the higher the likelihood of an explosive move. Fortunately, the Squeeze Pro has three types of squeezes (high, mid, and low compression squeezes).
So the more compressions the chat displays, the higher the potential for an explosive move. On the other hand, less compression means more squeezes. Therefore, you can include this indicator in your strategy.
This indicator was originally designed using multiple components like momentum, Keltner Channels, and Bollinger bands. But with Squeeze Pro, you can capture more moves than with the initial squeeze momentum indicator thinkorswim. In fact, squeeze pro is the indicator for intraday trading.
Stock Squeeze Indicator: Finding Squeeze
When well plotted, you can monitor the progression of the squeeze and even find out when it’s about to fire. Generally, Bollinger bands, one of the indicators used by the squeeze indicator, help traders find a squeeze in a chart. So when used with the other tools, you can easily spot a squeeze and profit from it.
With the stock squeeze indicator, you can notice when the squeeze is in effect. Remember, it uses green and red dots along the 0-line to show you when there is a squeeze. When this indicator shows red dots, then it shows that the squeeze is in effect.
But when there is no squeeze, then this indicator will display some green dots. When the squeeze is about to fire, then a green dot will appear after a few red dots. On the other hand, this indicator’s histogram will show you the market’s momentum.
When the momentum is reduced, then, the histogram will be either dark blue or red. But when the momentum is increasing, then the histogram with either be light blue or yellow.
TTM Squeeze Stock Screener
The TTM Squeeze screener measures the momentum and volatility of a stock and uses the information to detect trading opportunities. The momentum component shows the likelihood of a breakout while helping you determine the exit points. The volatility part signals a breakout after a session of low volatility.
A TTM squeeze stock scanner searches for the consolidation patterns in an uptrend using EMA moving average and the TTM squeeze. The screener looks for shares that are in a squeeze and make sure that you don’t miss an entry or exit opportunity.
For confirmation, you can wait for about 5 histogram bars for you to be sure that a squeeze is in effect. But when the dots change color from red to green, the squeeze s about the end. So you can change the timeframes to be sure of the market’s sentiments. To confirm a squeeze, you can use the TTM squeeze screener together with other tools like the ADX.
Squeeze Momentum Indicator With ADX
With TTM squeeze explained, the next step is discussing the best tools that can work with a stock squeeze indicator. And one of the best combinations is the squeeze momentum indicator + ADX combination.
When using the squeeze momentum indicator, you can use the ADX when measuring volatility. If the wave is below 20, there is low volatility, while over 20 means high volatility.
Unfortunately, the ADX won’t show you the momentum of the volatility, so you’ll need to use other tools. Remember, powerful squeezes occur when the volatility is low and about to shift to high volatility.