Kaioh Squeeze Expansion Strategy
Family: volatility · Regime: trending · Complexity: medium · Asset classes: XAU/USD, EUR/USD, GBP/USD · Timeframes: M15, H1
Thesis
Market volatility is cyclical; periods of low volatility (squeezes) are followed by high volatility expansions. By filtering these expansions with a directional momentum oscillator (MOM) and a fast-twitch execution trigger (Restu Kaioh), one can enter at the point of maximum price velocity. The hypothesis is that the combination of volatility compression (BSA) and stochastic surge (Restu) identifies the 'breakout' moment more accurately than price-action alone.
Components
- Bollinger Bands (Standard) (regime) — Defines the medium-term regime; trades are only taken in the direction of the price relative to the midline (SMA20).
- Momentum (MOM) (direction) — Ensures that the price delta over the last 10 periods is positive for longs and negative for shorts, preventing entry into stagnant markets.
- Restu Kaioh Scalping Indicator (entry) — Provides the final execution trigger by identifying high-velocity momentum states (Stochastic > 80 for long) that coincide with the squeeze release.
- SuperTrend (exit) — Provides a trailing exit mechanism that accounts for both trend direction and volatility, allowing for 'letting winners run'.
- Average True Range (NNFX) (risk) — Used for calculating dynamic stop-loss distances and position sizing based on recent market range.
- Bollinger Squeeze Advanced (volatility_filter) — Acts as a volatility gate; ensures the trade occurs during a transition from low-volatility (squeeze) to high-volatility (breakout).
Known failure conditions
- Prolonged sideways price action where BB remains narrow but SuperTrend flips frequently.
- High-impact news events that cause ATR spikes without sustained directional follow-through.
- Negative swap costs exceeding expected alpha on low-timeframe (M5-M15) holds.
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