The daily high lows trading strategy is a trading strategy for price breakouts from highs to lows on a daily time frame. In trading, the daily timeframe is critical as most important market participants are trading This timeframe is used in both, so any trading strategy on the daily timeframe will give better trading results than the low price timeframe.
On the other hand, when price bounces off the highs and lows of the daily timeframe, it signals strong market momentum, and the rush high and low strategy can provide solid trading results if range-bound markets can be avoided.
Daily High and Low Strategy
The daily high and low trading strategy has a simple concept:
1. If the price falls below yesterday's K-line low, it may fall further
2. If the price breaks through yesterday's K-line high, it may go higher
It's very simple, right? This is the core of this trading strategy. Let's take a look at the pictures below:
In the figure above, once the price breaks through the intraday K-line high, the price may reach a new high, but under certain conditions, the price may not follow the above price trend.
If the breakthrough volume of the daily K-line is greater than that of the previous K-line, the price average conversion may attract a large number of investors. In the trading market, it is usually difficult to predict how long the trend can last. Almost 70% of the time in the market is It fluctuates within a certain range, so we can find a reliable daily line breakthrough position.
In trading markets, the basic concept of making money is to buy low and sell high, so any breakout bullish from a significant support level on the daily time frame would indicate a reliable Daily breakout strategy. Looking at the chart below, once the price breaks the daily line from the important support level, the price will rise.
Now look at the picture below to see what the price does once it crosses 50% of the possible trend (support and resistance as a trend segment in the picture).
How to do the high-low strategy?
This trading strategy is very simple, because traders can make most of their trading decisions the day before the expected fluctuations. The only purpose of this trading strategy is to prevent pending orders above or below yesterday's K-line, because you can learn from the previous K-line chart See if it's up or down.
Time period
Daily timeframes should be considered to determine high and low prices, after which move to lower timeframes for trading, such as H4.
break the rules
1. Identify currency pairs that are moving in a trend environment, and first predict the direction of the trend based on the market background or support resistance
2. For example, the price is actively making higher highs or lower lows. In this case, the price may continue the current momentum until it reaches the next resistance or support level. In addition, any changes from important key levels A breakout of a stock market usually leads to a new uptrend or downtrend.
3. When the previous day's daily K-line closes, place a buy stop above the high or place a sell stop below the daily low.
4. Set the stop loss to 50% of the daily K-line
5. For the profit level, the moving average price of the last three days can be considered. For example, the daily K of the last three days shows fluctuations of 100 points, 50 points and 100 points, and the average fluctuation is 83 points.
Daily High and Low Trading Strategy Example
The chart below shows the Daily High Low Trading Strategy
In the graph, we can see that the price moved up from an important support level, the daily close was above that support level, and a buy stop was taken on the daily close once the price was bullish from the key support level.
The next day, buy with a stop loss, and the price moves to the take-profit level, which is obtained by calculating the average price of the last three K-lines.
The stop loss is set at 50% of the previous day's K-line. If the stop loss is hit, it will indicate that the price will reverse or consolidate further. In this case, we should wait for a further breakthrough.
Summarize
First identify an intra-trend move or a possible new trend, place a buy stop above the candlestick if the price rises from support, and place a sell stop above the candlestick if the price falls from resistance. The stop loss should be 50% of the K-line of the previous day, and the take-profit will be the average fluctuation point of the K-line in the last three days.
In this trading strategy, the challenge is to avoid market pullbacks and volatility, in which case one should study price action well, measure price momentum to determine possible moves, and moreover, to get the most out of this trading strategy , subject to strong money management rules.
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