Volatility Contraction: BB Width, ATR and Tight-Bar Runs

The contraction workspace lets you specify what counts as unusually quiet behavior. It combines Bollinger width and ATR percentiles with a minimum run of tight candles. Those settings define a research condition; they do not predict the direction or timing of the next expansion.

The settings define the sample

Compression controls
Control	What it changes
Candle timeframe	The duration represented by each observation
BB period	The moving sample for the price envelope
ATR period	The sample used for average true range
Percentile lookback	The history used to rank width and ATR
Percentile threshold	How rare a quiet observation must be
Minimum tight candles	How long the compression condition must persist

Use a consistent contraction definition

Volatility Contraction: BB Width, ATR and Tight-Bar Runs tool workspace with numbered controls and reading points — Wide desktop interface capture, with the pictured source dates and selected filters. Readings illustrate the workflow and are not current market data.

Open Volatility Contraction and choose the market segment and timeframe.
Set the Bollinger and ATR periods, then choose the percentile-history lookback.
Choose a compression threshold and minimum tight-bar count.
Compare current state, base boundaries and participation in the resulting list.
Review a historical session using the same settings so a changed definition does not masquerade as changed market behavior.

Five candles depends on the timeframe

Five qualifying 5-minute candles describe about 25 minutes of sampling. Five daily candles describe five trading sessions. The count is the same, but the market behavior and response horizon are different.

Compression and direction are separate

Low width and ATR can persist without an immediate breakout.
Changing the percentile history changes the rarity comparison.
Small baselines and illiquid candles can create misleading compression.
A confirmed expansion state describes a completed set of conditions, not future profitability.

Which volatility tool should you use?

Use this workspace when you want direct control over compression periods, percentile thresholds and tight-bar runs. Use the Volatility Screener to compare broader research states and the cross-sectional regime map.

Volatility Contraction: BB Width, ATR and Tight-Bar Runs: frequently asked questions

01Does a squeeze tell me whether to buy or sell?

No. It describes compressed realized movement. Direction requires separate price evidence.

02Why do different settings show different stocks?

Each combination defines a different sample and threshold, so the same stock can qualify under one definition and not another.