The Bollinger Squeeze (TBS) Strategy

Hello everyone, I am pleased to introduce to you the Bollinger Bands Squeeze Strategy (TBS).

I have seen some of the indicators we will use for this strategy being used on other trading venues. However, it is a comprehensive package that can be a great tool for profitable trading in the financial markets.
This strategy comes from understanding three indicators. Bollinger Bands, Bollinger Bandwidth and S- Stochastic Oscillator. These three indicators must all confirm our trading signal. Therefore, to obtain a valid signal, three conditions must be met.

Condition 1: Touching the Bollinger Band/Lower Track <br> When prices reach highs, they will hit the upper limit. When prices reach lower levels, they will hit the lower limit. Therefore, in order for a valid trade to take place, the price must hit either the upper or lower limit.



Condition 2: Bollinger Bands Bandwidth is determined by Bandwidth Indicator
Bandwidth is the difference (gap) between the upper and lower frequency bands.
This bandwidth indicator takes the current width of the Bollinger Bands and compares it to the maximum and minimum width of the Bollinger Bands over N periods
If the calculated percentage is less than or equal to X percentage (which we will specify), the histogram displays yellow. If the calculated percentage is greater than X percentage, the histogram displays red.
This is a good quick way to see if a currency pair is in a volatile range (yellow) and if it is out of range (red)
In order to trade effectively, the Bandwidth indicator must be yellow, which means the price is restricted to a narrow range. This gives us the opportunity to trade on range tops and bottoms with the help of the stochastic indicator.



Condition 3: Stochastic Oscillator <br> The stochastic indicator usually has two horizontal lines, one at 20 and one at 80. The 20 line is called the oversold level, and the 80 line is called the overbought level. To get a valid buy signal, the Stochastic must be in oversold territory and cross above the 20 line. To get a valid sell signal, the Stochastic must be in overbought territory and cross the 80 line downwards.



Putting this together as a buy signal <br> Once the price hits the lower limit, you will check the bandwidth indicator. The Bandwidth indicator must show that the price is within a range (yellow) and then you will wait for the Stochastic indicator to confirm the trade. Stochastic must cross the 20 line upward from the oversold area.

Put it together to get a sell signal <br> Once the price hits the upper limit, you will check the bandwidth indicator. The Bandwidth indicator must show that the price is within a range (yellow) and then you will wait for the Stochastic indicator to confirm the trade. The stochastic indicator will have to cross below the 80 line from the overbought area.



Summarize


The three indicators required are Bollinger Bands (included in Metatrader), Bollinger Bands (custom indicator, attached), and Stochastic Oscillator (included in Metatrader). Here are the settings:

Bollinger Bands
Period – 20, Shift – 0, Bias – 2, Set ‘Off’

Bollinger Bands Bandwidth
Period – 20, Translation – 0, Deviation – 2, Width calculation period – 100
Minimum range percentage – 20

Stochastic
%K period - 9, find it below:
%D period - 3
Slow down - 3
Price field - low/high
MA method - simple

Bandwidth indicator and additional templates.




If you would like to see a video explanation of this strategy, click here:


Finally, here is an example of trading using this strategy:


You can ask any questions or comments in this forum or on the YouTube page.
Happy transaction.