Last updated: September 26, 2022

Bollinger Band Squeeze Scan on Thinkorswim

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Bollinger Band Squeeze Scan on Thinkorswim

If you are looking for a Bollinger band squeeze scan on Thinkorswim, there are a number of options available to you. But before diving into the choices available on Thinkorswim, let’s talk a little about the Bollinger band squeeze.

What is the Bollinger Band Squeeze?

The Bollinger band, created by John Bollinger, is a tool used to make technical analysis by plotting two standard deviations (negative and positive) above and below a simple moving average of the price.

A Bollinger band squeeze occurs when the Bollinger band width is narrow due to the low volatility of the stock.

When the bandwidth is low during a low volatility period, the likelihood increases of prices fluctuating, which may result in the start of a trend

When the bands' distance increases due to high volatility, it may be a sign that the existing trends of the market are reversing. Usually, the prices will move within the bands’ envelop, occasionally touching one band and the other. These price shifts indicate to the trader the potential of profit in the stocks they are interested in. 

Why should you use Thinkorswim?

TD Ameritrade’s Thinkorswim is a top-rated online trading site that is perfect for beginners as well as advanced traders. It provides its members with the options to trade stock with top-notch charts, filler studies and scanners. Think of Thinkorswim as a trading broker – the best trading broker out there!

Thinkorswim is available in mobile and desktop versions for stock trading, ETFs, futures, forex, and multi-leg.

However, Thinkorswim is a much more advanced platform on your desktop with all the tools that are needed by a serious trader. The charts available are equipped with all the customizable options required to make trading more convenient for you, including time charts, range charts, tick charts as well as seasonal charts with tools to draw on them. 

Options for Bollinger Squeeze Scan on Thinkorswim: 1. TTM Squeeze

This squeeze indicator comes with TOS and correlates the relationship between Bollinger Bands and Keltner Channels. It shows how with increasing the volatility, the width also increases and vice versa the width decreases with low volatility.

It locates the Bollinger Bands sections that intersect with the Keltner Channels. The indicator automatically turns off after the market finishes a move which results in the band being pushed outside the range of Keltners Channels. 

You can read more about Thinkorswim Keltner Channels here.

The TTM Squeeze indicator generates a buy or sell sign when placed alongside the Momentum Oscillator. The buy signal consists of the indicator being on (green) and the Momentum Oscillator colored cyan (this signal is considered accurate until two blue bars in a row). 

Bollinger Band Squeeze Scan on Thinkorswim TTM SQueeze

However, if the Indicator is on but the Momentum Oscillator is red, that is interpreted as a sell sign (this signal is considered accurate until two blue bars in a row). In case the indicator is off (red), no trade is recommended.

How to Create Bollinger Squeeze Scan Thinkorswim using TTM Squeeze

To use Thinkorswim to create a Bollinger squeeze scan, reset the existing scan and add the study filter.

Change the default from ADXCrossover to TTM_Squeeze and choose the option of Squeeze Scan Alert. Since you are looking for stocks with a false squeeze rating, select the appropriate options, as shown in the picture below. 

Bollinger Band Squeeze Scan on Thinkorswim-use Thinkorswim to create a Bollinger squeeze scan

The image below shows the basic coding you need to locate stocks with a false squeeze rating for the past six days.

Bollinger Band Squeeze Scan on Thinkorswim-Basic coding you need to locate stocks

After completing the coding, you can add customizable filters to your needs and the preferences of stocks you're interested in. 

After putting in all the filters, click scan, and you will see a list of stocks that fall under the selected categories. 

Options for Bollinger Squeeze Scan on Thinkorswim: 2. Explosive Squeeze Script

Another interesting feature you can use is the Explosive Squeeze Script which was created by users on the usethinkscript forum. It is a great tool that uses the Bollinger band as a way of measuring the volatility of a stock. The image below shows the coding to enable the Explosive Squeeze Script.

Bollinger Band Squeeze Scan on Thinkorswim- the coding to enable the Explosive Squeeze Script.

The setup scans for High Average Bandwidth of 30 which shows high volatility and that current bandwidth is less than 15. Once you’ve added all the custom features and filters, save the file and open it in the watchlist. 

It is also a customizable scan, some of the strategies users recommend is on the daily chart top to identify squeezes and breakouts or breakdowns. Another is to look for low volatility average but high volatility at the time of scanning.

Some problems you might face using Thinkorswim

Some users feel that a drawback on Thinkorswim is that it is not the best at executing orders. It doesn't mean that it is terrible, just that it can use some improvements. The market orders take a while to be placed, which isn't ideal for someone doing day trading. So, while using Thinkorswim, you will need to be careful placing orders for low volume stocks. 

Currently some users of Thinkorswim, have reservations regarding the merger that is taking place between TD and Schwab. Ever since Schwab bought TD, the rumors that this might not be in the best interest of features of the software have been surfacing.

However, so far there haven't been any changes in the features of Thinkorswim and a merger doesn’t necessarily mean that anything major will be changing so we’re hoping for the best! 

Conclusion

The various Bollinger Band Squeeze Scans can have multiple options of filters that can be added to customize the result to each user's need.

You might be also interested in Thinkorswim Bull Flag Scanner and Thinkorswim Memory Usage Settings.


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