This is an interesting indicator re-created by other traders on the TS forum. Known as the BB Squeeze Indicator, its concept is based on capturing breakout moves by using the Bollinger Bands and the Keltner Channels.

Whenever the Bollinger Bands fall inside the Keltner Channels the indicator will fire a signal. This signal is represented by a red dot on the lower pane.

When the Bollinger Bands breakout of the Keltner Channels the indicator fires a squeeze indicated by a blue dot on the lower pane. The trading signal is taken when the blue dot appears after the red dot in the direction of momentum. Momentum is plotted as a histogram. If the momentum is green (up) on a squeeze, this is a long signal. If the momentum is red (down) on a squeeze, this is a short signal.

See attachment for a screenshot.

Note: Please refer to the tradestation Forum for the owner of this indicator.

[Freddie]

Just taking a look at this indicator and am trying to backtest it in Amibroker. Do you know of a version for Amibroker? Most of it is pretty straight forward; just not sure about the momentum portion and how it is handled.

thx,

Ed

[Soultrader]

No clue Freddie. Youre asking a tradestation guy

[torero]

Has anyone put this backtesting in TS? If not I'm willing to do and share the results with you all. I can convert it into a strategy and see if it's profitable or not. I'll be back on March 7th so I can get started then.

I need to get more examples on this indicator so I can have a clear understanding how this works. Any details (links, etc) would greatly help.

So I'll start with questions:

1) what is considered a dominant momentum? big green histogram? how big and how long is it? Does it have to more of these than red histogram?
2) What about divergence? For example, while prices are making new high, but a green histogram is smaller than the last green histogram peak. Any consideration in that?
3) The signals to trade only when the dots turn blue? Where do we exit? When it turns red?
4) What stops are used? Trailing stops, hard normal stops?
5) Target profits?
6) What timeframes are recommended? Tick or minute charts?
7) What instruments are recommended?

[torero]

My initial impression is that from the interpretation and use, there seems to be alot of false signals or that signals fire off but prices stall or just goes the other direction. Prove me wrong.

[walterw]

Torero: my experience with this indicator its that you must be a breakout trader... if you are not a breakout trader this indicator its not recomendable... cheers Walter

[Kiwi]

To me its like the New Market Paradigm that Walt Downs put together. The bollinger contraction is essentially volatility declining which means that when a breakout occurs it is more likely to continue (volatility expansion/contraction being cyclic).

[Soultrader]

I believe the guys over at Trade The Markets use a 5 minute squeeze more often than the others. I personally do not use this indicator but I have seen the 5 minute squeeze give off nice signals before an actual breakdown or breakout.