Carter-Ashi Squeeze Expansion Strategy

Family: breakout · Regime: trending · Complexity: medium · Asset classes: FX, Indices, Crypto · Timeframes: H1, H4, D1

Thesis

Market volatility is cyclical; periods of extreme compression (measured by TTM Squeeze) are followed by directional expansions. By entering only when price momentum (Stochastic) and smoothed trend (Heiken Ashi) align with a squeeze release, we capture the high-velocity phase of the expansion while using ATR-based trailing stops to maximize the trend duration.

Components

• Bollinger Bands (Standard) (regime) — The midline (SMA 20) defines the medium-term trend bias, ensuring entries are taken in the direction of the mean-deviation.
• Heiken Ashi (direction) — Filters out minor price noise and counter-trend retracements, ensuring the smoothed momentum is aligned with the entry.
• OTLIB Stochastic Oscillator (entry) — Provides the tactical trigger by identifying momentum turns within the broader trend smoothed by Heiken Ashi.
• UTBot Alerts (exit) — Utilizes an ATR-based trailing stop logic to capture extended trends and exit dynamically when volatility reverses against the position.
• Average True Range (NNFX Version) (risk) — Calculates the volatility-adjusted stop distance and position size to normalize risk across different market conditions.
• TTM Squeeze (Carter Ratio version) (confirmation) — Acts as the primary volatility gate; trades are only considered when a 'squeeze' (BB inside Keltner) is released, signaling a potential volatility expansion.

Known failure conditions

• The strategy produces consecutive losses during 'fake-out' squeeze releases where volatility expands but price immediately mean-reverts.
• Heiken Ashi lag results in entries occurring after 70% of the ATR-measured move has already completed.
• The UTBot trailing stop is consistently hit by noise before the primary trend can develop.

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