This is some great stuff. I've been incorporating some tactics in my algorithms lately for detecting the "squeeze" and placing straddle orders when identified. My win rate on them is actually pretty low: <45% so far. But my profit factor is still higher than 1, so the wins are outweighing the losses.

From a philosophical perspective, I have some issues with standard deviations in trading. Price points aren't independent, random, and normally distributed. All three of those conditions are necessary for that whole z score percentile relationship to hold. The independence is the real hangup, because prices aren't independent, they're dependent on prior state. It's a markov process, not an independent process. The movement in price is independent, however. That is the reason why I tend to use Keltner Channels instead. Keltner Channels are based off of average true range, which is a volatility indicator that measures variation in price movement as opposed to price points. They're more stable (they don't "balloon" like Bollinger Bands do) and tend to represent boundaries of where prices could go a lot better.

That being said, the wild nature of standard deviations actually makes the dramatic squeeze effect more pronounced and noticeable, and a lot easier to model. And returns are not gaussian, they tend to be heavy tailed, which actually confirms a lot of what you and a lot of traders know (either explicitly or implicitly): breaking out of 2 standard deviations from the mean generally means you are in fat tail territory and you can expect that behavior to dominate for the near future. So even though I have some kind of moral opposition to bollinger bands, they've still turned out to be pretty useful.

So my current algorithms actually use both keltner channels and bollinger bands. I use keltner channels for profit taking in a trend and for a form of market making in non-trending markets (the market making stuff has only worked for me in crypto, haven't had much success with it in forex yet). I use bollinger bands to detect squeezes for straddled breakouts.

For those looking for trading ideas, take this all with a grain of salt. I'm trading on a real account only very recently. I've had some good backtest results and some good forward test results, and I've made real money with algotrading crypto using these ideas, but it will be a while before I can confidently say my algorithms work in real forex trading.