This strategy calls for scanning Squeezes in the Daily, 3-Day and Weekly charts. The idea is to look for stocks or indices that will make a big move either upward or downward. Either direction is quite alright and the emphasis is on Big moves.
Entries and Exits For Entries and Exits, we will look for Squeezes in the smaller timeframes like 4 hours, 2-hours, 1-hour, 30-min, 15 min, 5 min and 3 min.
We would like to trade in the direction of the market. This means if the market are bullish, we should look for trades to the Bullish Long direction. Likewise if the market is Bearish, we look to trade in the direction of the Sell Short side. The market means the S&P 500 as it is the most representative of the overall market.
Volatility (Beta) Some stocks are just more volatile that others. For Options trading, these stocks are the preferred stocks to trade as Big moves in a short timeframe translate to big profits. Especially when buying Calls or Puts, the time decay (Theta) for short expiration trades are quite significant and hence big move in either direction is needed to offset the theta decay.
Chart 1: Multi-TimeFrame Squeezes strategy
In-Sync with the market Typically we would like to be in-sync with the market across the higher timeframes like the daily, 3-Day and Weekly charts as well as the shorter timeframes. The significance of the higher timeframes are for swing trading across many days where as shorter timeframes are useful for intraday trading.
