🌊 Swing · Volatility expansion
Breakouts with BB width
Bollinger Band Width contracts during consolidation and expands during breakouts. Trade the direction of the first strong candle after a width-squeeze; set stops inside the prior range.
Setup
- Chart: daily or 4-hour candles with Bollinger Bands (20, 2)
- Compute BB Width = (Upper − Lower) / Middle; plot as a lower-pane oscillator
- Wait for BB Width to compress to a 6-month low (visually: the tightest bands you can see on the chart)
Entry
Enter on the CLOSE of the first candle whose body fully engulfs the tight range in either direction — long for an upward expansion, short for downward. Volume should confirm.
Exit
Target = 2-3× the width of the compressed range. Trail behind swing pivots if the expansion persists.
Stop-loss
Back inside the compressed range (below the middle BB for longs, above for shorts). A quick reversion means the breakout was a fake.
When it works
- Extreme compression — BB Width at 6-12 month lows
- Confirming volume on the expansion candle
- Broader market not in a strong opposing trend
When it fails
- Modest squeeze (BB Width above its recent lows) — no explosive move stored up
- Fake breakout followed by immediate reversion — always wait for the candle to close
- Range-bound choppy environment where every candle looks like a break
General trading rules that apply
Regardless of the specific setup, these apply to every strategy on this site:
- Never risk more than 2% of your account on a single trade
- Place a hard stop-loss before entering — no exceptions
- Journal every trade: setup, reason, outcome, one lesson
- After two consecutive losses, stop for the session
- Backtest and paper-trade for a month before deploying real capital
Every strategy here is part of our in-house catalogue, written and calibrated for Indian markets. Past behavior does not guarantee future results. Charts run against 2-year Nifty data — actual results in your account will vary. Backtest, paper-trade, and size responsibly before risking real capital.