OZFX Squeeze Strategy

A rules-first “volatility squeeze → expansion” method popularized in the OZFX community.
We wait for volatility compression, then ride the breakout/expansion with tight risk control.

Tools

• Bollinger Bands: 20-period, 2.0 deviation (on Close).
• Keltner Channel: 20-period EMA with ATR(10) × 1.5 (typical settings).
• Optional: ATR(14) for stops/size, session separator (London/NY).

Squeeze condition

• Compression when Bollinger Bands are inside the Keltner Channel for N candles (N≈3–10).
• Mark it as a “squeeze zone”. Avoid entries inside the squeeze.

Entry logic

After the squeeze ends (BB expands outside KC), use one of the following:

1. Breakout candle: enter in the direction of the close beyond the outer Bollinger.
2. Retest entry (preferred): wait for the first pullback to middle band/EMA20 and a rejection.

Stop Loss

• Conservative: beyond the opposite band or below/above the squeeze base.
• ATR-based: ATR(14) × 1.5–2.0 from entry.

Take Profit

Choose one and be consistent:

• R-multiple: TP at 2R–3R.
• Trail: behind the middle band (EMA20); tighten to the opposite inner band after strong move.
• Structure: partials at prior swing S/R.

Management

• Move SL to breakeven after a close beyond the outer band + one candle.
• Trade during London/NY overlap; avoid top-tier news within 1 hour.

Risk Rules

• Risk ≤ 1% per trade, max 3 concurrent positions per pair.
• Align with H4/D1 bias; skip counter-trend squeezes in heavy ranges.
• Backtest first, then forward-test on demo.