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The BEST Indicator On TradingView: Squeeze Momentum Indicator Strategy (Lazybear)

Quick Links : 

* The Squeeze Momentum Screener AKA PUMP/DUMP ScreenerYouTube Video 

*.Squeeze Momentum StrategyYoutube Video

With 76,000 likes on Trading view, Squeeze Momentum indicated by a lazy bear is one of the most popular trading view indicators. In this article, we are going to be mixing the indicator with a 200 ema and checking if it yields good entries. We are going to try to make a highly profitable trading strategy with the best trading view indicator. The article will explore the different indicators, the settings used, and the results achieved. Read below to find more.

Indicators Explained

There are 3 main indicators used in this trading setup, and each of these indicators has been explained below in detail.

Squeeze Momentum Indicator [LazyBear]

The indicator was created by John Carter to shows the market volatility. It shows the periods when volatility increases or decreases, in other words, when the market goes from the trend into flat movement and vice versa. The Black crosses on the midline show that the market just entered a squeeze, thus signifying low volatility. The market is preparing itself for an explosive move (up or down). The Gray crosses signify the opposite, a “Squeeze release”. It is suggested to wait till the first gray after a black cross, and taking a position in the direction of the momentum (for ex., if momentum value is above zero, go long) and exit the position when the momentum changes (increase or decrease — signified by a color change).

Exponential Moving Average (EMA)

The EMA is simply the exponential moving average of the stock’s closing price over a given number of trading sessions. It works in a very similar way to the SMA (Simple Moving Average), except it gives more priority to more recent data as this is considered to be more relevant than old data. The parameter that you have to enter for the EMA is the time period. Usually, traders only go long when the current price is above the EMA, and short when prices go below the EMA.

Average Directional Movement (ADX)

The ADX helps measure the overall strength of a trend. ADX not only identifies trending conditions but also helps the trader find the strongest trends to trade. It is an average of expanding price range values. The ADX is a component of the Directional Movement System developed by Welles Wilder. This system attempts to measure the strength of price movement in positive and negative directions using the DMI+ and DMI- indicators along with the ADX.

Settings

For this particular trading setup, the following settings were used on the indicators:

  1. Squeeze Momentum: Default setting 
  2. EMA: Period = 200
  3. ADX: Period =25

The 200 EMA is going to give us our trend direction so if the close or the price is above the 200 EMA or in an upward direction then we are looking for longs. And if it is below 200 EMA then we looking for shorts. 

Add an ADX indicator to remove bad trades. Please note that ADX does not work with the ABC pattern because it requires momentum in the market for it to actually show. 

Results

After 1 hour the overall results were:

Profitability: 962.74% net profit

Number of Trades: 103

% of trades profitable: 73%

Profit factor: 2.357

Kelly Ratio: 1.4

Conclusion

This trading strategy is based on the fact that the market goes through periods of increased volatility followed by periods of lower volatility. Generally, the market consolidates 80% of the time before it breaks out. This is a good time to enter a long position and profit when the breakout occurs. Now we understand why this is one of the most downloaded indicators on trading view as it is rare to see a single indicator that manages to get such good results. 

Resources

  1. The BEST Indicator On TradingView: Squeeze Momentum Indicator Strategy (Lazybear) – Youtube   
  2. Squeeze Momentum Indicator [LazyBear] – ATAS
  3. Exponential Moving Average — Investopedia
  4. ADX — Fidelity

This content is available exclusively to members of Davidd's Patreon at $8.5 or more.

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