Strategy for Squeeze Momentum Indicator [LazyBear]

The Strategy for Squeeze Momentum Indicator [LazyBear] tool provides a backtesting framework based on the popular Squeeze Momentum indicator to identify volatility breakouts and trend strength.

Usage

The strategy enters a long position when the Bollinger Bands expand outside of the Keltner Channels (signaling a squeeze release) and the momentum histogram shows strong positive movement. Conversely, short entries are triggered when the squeeze releases with strong negative momentum. Users can utilize the "Early entry on momentum change" feature to capitalize on momentum reversals before the standard trend confirmation occurs. The "Filter for Momentum value" can be used to avoid entries during low-volatility periods or weak momentum shifts.

Details

This script is a strategy implementation of the Squeeze Momentum Indicator originally developed by LazyBear. It calculates the relationship between Bollinger Bands and Keltner Channels to identify "Squeezes" (periods of low volatility). When the Bollinger Bands are inside the Keltner Channels, a squeeze is active (indicated by black crosses on the zero line). When the bands expand outside the channels, the squeeze is released, often leading to significant price movement. The momentum value is derived from a linear regression of price relative to the average of the KC range and a SMA.

Settings

Core Parameters

• BB Length: Sets the lookback period for the Bollinger Bands calculation.
• BB MultFactor: Adjusts the standard deviation multiplier for the Bollinger Bands width.
• KC Length: Sets the lookback period for the Keltner Channels.
• KC MultFactor: Adjusts the multiplier for the Average True Range (or range) to set Keltner Channel width.
• Use TrueRange (KC): When enabled, uses True Range for KC calculations; otherwise uses high - low.

Filters

• Early entry on momentum change: Enables "extreme" orders that trigger entries based on momentum histogram color changes before a full trend confirmation.
• Filter for Momentum value: Enables a minimum threshold requirement for the momentum histogram to trigger a trade.
• Min for momentum: Defines the specific threshold used when the momentum filter is active.

Backtesting Dates

• Custom Backtesting Dates: Toggles the ability to restrict the strategy execution to a specific time window.
• Start/Stop Parameters: Sets the year, month, day, and hour for the backtesting window.

FAQ

How do I use the Strategy for Squeeze Momentum Indicator [LazyBear]?

Apply the script to your chart and use the Strategy Tester tab in TradingView to view performance metrics. Adjust the BB and KC lengths to match the volatility of your specific asset.

What is the difference between the standard and early entries?

Standard entries require the squeeze to release while momentum is strong. Early entries (Extreme Orders) trigger as soon as the momentum histogram changes direction (e.g., from dark red to light red) after a squeeze.

How can I access this strategy?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.