The Adaptive 5-minute Strategy
There are several optimal template expiration periods. One of them is the 5-minute interval, and the 1-minute interval is also one. This duration period of trading contracts is the most popular among modern traders on online platforms. You save time by receiving a sufficient number of accurate signals.
In this article, we will look at a 5-minute strategy called Squeeze, which is on a minute chart with two indicators. Trading on this system will require a platform for technical analysis from TradingView (https://www.tradingview.com), as well as any trading terminal that supports these expiration periods. We recommend choosing Binomo – it is a reliable, time-tested company that offers favorable conditions for both beginners and experienced traders.
Information about the indicators
The strategy is based on two tools – the MESA Adaptive Moving Average and TTM Squeeze. Both indicators are custom developments modified by advanced traders from the TradingView portal. Let’s look at each tool in more detail.
The MESA Adaptive Moving Average is a ratchet-based Moving Average. You can find detailed information on its calculation formulas on the internet if you so desire. However, in this article we will not delve into mathematics, instead we’ll proceed right to practice. The difference between this type of Moving Average and the hundreds of others is its unique approach to averaging, which is adaptable to amplitude pricing. As a result, when the price makes a sharp jump, the averaging is increased, and when the momentum fades, the MA becomes more perceptive. It seems to be able to adapt to any market conditions, hence its name.
In this strategy, we are using an adapted version of the indicator, somewhat improved upon by the trader known as “LazyBear” on the TradingView portal. On our site, we have already examined a few strategies using this user’s developments. His tools are very popular and are at the top of the rankings of custom developments for live charts.
TTM Squeeze is a tool for determining the level of volatility, which was created by John Carter. Judging by its operating principle, it looks more like an oscillator but with elements of a trend analyzer. It is classically presented in the form of a histogram. Interpretation of the signals for this instrument is standard, as well as for other histogram indicators, including the MACD or the Awesome Oscillator from Bill Williams.
Setting up the terminal and the platform for analysis
Trading on this system will require a professional-level platform. A standard web terminal with trading functionality is no longer enough. We will use a very well-known service – the live chart from Trading View. It is an online chart where many thousands of various indicators are available, and if you wish, you can develop your own unique tools and offer them to the trading community to assess. This is a unique platform which is one of a kind.
- Open the TradingView portal and log in or create an account if one doesn’t already exist. It’s free. To use the necessary basic functionality, a paid subscription is not needed.
- Open the chart and choose an asset to trade. A good option would be the EUR/USD pair. Set the “candlesticks” price display mode and the time frame to 1 minute.
- Using the search function, copy the names of the two indicators without quotes and add them to the chart: “Ehlers MESA Adaptive Moving Average” and “TTM Squeeze.”
- For the Adaptive Moving Average, leave the default settings, but you can increase the thickness of the curve to make it easier to see. For the TTM Squeeze indicator, we reduce the period to 12. The thickness of the histogram bars can also be set to the maximum, this will help you see them better.
Trading signals on the strategy
The Adaptive MA consists of two curves of different periods, that’s why this indicator gives two signals – the intersection of lines and an increase/decrease in the distance between them. We are interested in the main signal in the form of an intersection of the movings. But the distance between them also plays a role in determining the phase of the market.
- The signal for an increase – the red EMAMA breaks through the green and rises above it. The TTM Squeeze histogram begins to build above the zero level.
- The signal for a decrease – the red EMAMA breaks through the green and falls below the red line and candlestick formations. After overcoming the boundary, the histogram begins to build in the negative plane.
The picture above shows examples of signals on the technical analysis platform. They look exactly the same on the Binomo web terminal (open demo).
The correlation between the 1-minute time frame and 5-minute expiration is best suited for these indicators. Most of the signals on this system will enable you to make a profit within 4-6 price bars after the intersection of the Moving Averages.