Binary option robot AGO: Higher high lower low trading system

Buy the Higher Low and Sell the Lower High.

Position Trading based on technical set ups, Risk Management & Trader Psychology.

Article Summary: Trading in the direction of the trend and buying low while selling high are mutually exclusive. Because we recommend you locate the direction of the trend and find a good entry, DailyFX has a new concept for you to consider. Buy the higher low and sell the lower high. This article will provide you with methods to do just that to prevent you from catching a falling knife.

If you’ve ever heard a trader say that price can’t possibly go any lower, chances are they haven’t been trading for long. That’s not meant to be harsh but simply to say, no trader knows the future. What traders can do is recognize that patterns tend to play out and repeat over and over again which can lead to higher probability entries.

Learn Forex: Buy Low & Sell High Is Cute But Ineffective.

Chart Created by Tyler Yell, CMT.

One of the principles of every trader who enters an order, whether long or short is that they believe they’ve entered at a good price in relation to where they expect the market to go. One trader will be right and the other will be wrong if they entered at the same price with similar stops and limits. While there is no guarantee which trader will be profitable and which won’t, there are some things we can do to put the odds in our favor.

Learn Forex: Buy the Higher Low with Bullish Trend Lines or Rising Channels.

Chart Created by Tyler Yell, CMT.

Learn Forex: Sell the Lower High with Bearish Trend Lines or Falling Channels.

Chart Created by Tyler Yell, CMT.

Methods to Help Prevent Buying a Low Before It Goes Lower.

As stated at the beginning of the article, there is no crystal ball or Holy Grail. However, there are methods that you can use to stay on the likely right side of the big moves. The three methods we’re going to look at are pivot lines to identify support and resistance, RSI to understand directional strength, and trendlines or directional channels.

The purpose of these three methods is to help you avoid buying something that’s falling. On the other hand, selling something just because it’s rising can become a fool’s game as well. That’s why studying price action can give a big leg over investors or traders who feel pr ice “can’t go any lower”, which has been the rallying cry of many losing trades.

Pivot Line s for Support & Resistance.

Pivot Lines are a leading indicator of sort. In short, Pivot Lines are a famous indicator to help you forecast likely future points of resistance and support to limit risk and find profit targets. Rising Pivot levels overtime can help you find a significant higher low to enter a buy trade or lower high to enter a sell trade on.

Learn Forex: Pivots Clearly Paint Dynamic Levels of Rising Support for Entries Zones.

Chart Created by Tyler Yell, CMT.

Knowing that the Holy Grail doesn’t exist, Pivots are a helpful way to get a feel for the directional bias. Combining pivots lines with candlestick analysis is a preferred method of many traders to find strong entries with the trend. A short cut for new traders looking at price action is to fade long wicks (highlighted above) against the trend as they likely are a rejection of a price test and often end up carrying back price in the direction of the trend.

Relative Strength Index (RSI) for Directional Strength.

The Relative Strength Index is the utility knife of many traders. When the RSI crosses an extreme level and is making directional moves higher or lower, traders can look for strong entries that favor the RSI bias. One simple way to find a directional bias on RSI is to add a moving average or trendline to the RSI and find bounces off support or breakouts of the RSI for a high probability entry.

Learn Forex: RSI with Moving Average Added For Directional Bias.

Chart Created by Trading Central.

Rising or Falling Trendlines or Channels.

Trendlines and channels are nice and simple. The value of a trendline or channel is increased every time it is tested. When markets are moving higher a trendline is a form of support that can be used to identify buying opportunities. When markets are moving lower, a trendline is a form of resistance that can be used to identify selling opportunities.

The purpose of this article is to help you understand that buying low and selling high is not a given trading system. You may be buying something that’s about to go a lot lower or selling something before it skyrockets. Because price is the ultimate indicator, trendlines or channels can help you pinpoint a higher probability entry as opposed to a cheap entry which could end up costing you a lot if it continues to move against you.

Learn Forex: There Is No Guarantee you’ll get the Lower High You Want.

Chart Created by Tyler Yell, CMT.

Finding a directional bias through the methods above can help you pinpoint entries. There is nothing wrong with buying a low or selling a high as long as it’s in the direction of the prevailing trend. Trading against the prevailing trend is often more trouble than it’s worth so we recommend identifying the trend and then entering on opportunities with the trend.

---Written by Tyler Yell, CMT.

Trading Instructor/ Currency Analyst.

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Swing Trading Entry Strategy.

Your swing trading entry strategy is the most important part of the trade. This is the one time when all of your trading capital is at risk. Once the stock goes in your favor you can then relax, manage your stops, and await a graceful exit.

This page explains the basic price pattern that is used to enter stocks. Once you become familiar with it, you can try out more advanced strategies based on the specific pattern that you are trading. More on that in the chart patterns section.

With your entry strategy, the first thing that you want be able to do is identify swing points. What's a swing point you ask? This is a pattern that consists of three candles. For entries on long positions, you look for a swing point low. For entries on short positions you look for a swing point high.

Identifying reversals using swing points.

For a swing point low:

The first candle makes a low. The second candle makes a lower low. The third candle makes a higher low.

This third candle tells us that the sellers have gotten weak and the stock will likely reverse.

For a swing point high:

The first candle makes a high. The second candle makes a higher high. The third candle makes a lower high.

This third candle tells us that the buyers have gotten weak and the stock will likely reverse.

For our long entry strategy, we are trying to find stocks that have pulled back and made a swing point low .

Let's look at some examples:

See how the pattern consists of a low (1), lower low (2), then a higher low (3)? This is a classic swing point low. Our entry strategy would be to enter this stock on the day of the third candle.

Now lets look at a stock on the short side.

See how the pattern consists of a high (1), higher high (2), then a lower high (3)? We would look for an entry on the third candle.

It is worth noting that not all swing points will result in a powerful reversal. However, a reversal will not happen without a swing point developing. Take the time to go though a few stock charts and look at the reversals that happened in the past so that you are able to quickly identify this crucial price pattern.

Consecutive price patterns.

Ideally, we want to trade stocks that have consecutive down days prior to the swing point low developing . This is the best case scenario. Here is an example on the long side:

This is reversed on the short side. In this case, you want to look for consecutive up days prior to the swing point high developing.

When you are looking for swing points to develop, you always want to look to the left of the chart to see if the stock is at a support or resistance area on the chart. That will improve the reliability of this entry strategy.

Also, sometimes you may want to be more aggressive with your entry. Check out this page for an alternate entry strategy.

Ok, now that we know how to get into a trade, how do we get out?

Learn to trade.

Trading Course.

This is a home study course that teaches you how to trade stocks from full-time swing trader Kevin Brown. Definitely one of the best swing trading eBooks that you can buy.

Recommended Reading.

What Are the Best Stock Market Books?

See my list of the top technical analysis books that I think every trader should own.

Candlestick Patterns.

Candlestick Course.

This course teaches you all the common candlestick patterns, shows you the backtesting for each pattern, and then puts it all together into a complete trading system.

Higher High? Higher Low? Lower Low? Lower High?

Some people will tell you that trends “move in waves.” They will say, for example, that up trends are made of a series of higher highs and higher lows, like this:

And a downtrend is just the opposite (a series of lower lows and lower highs).

Now that’s cool and it makes sense, but there are two other things price can do: make double tops and double bottoms (when a high is the same as a previous high and when a low is the same as a previous low):

As far as this kind of price action is concerned, those are all the possibilities you can have.

Conventional thinking will tell us that higher lows, for instance, are bullish because they mean price was unable to break the previous low before going back up.

Double tops are likely to be bearish because it means price was unable to break above the previous high (and you could also look at it as price bouncing off of previous resistance, which is bearish).

Double bottoms are likely to be bullish because it means price was unable to go beneath the previous low (and you could also look at it as price bouncing off of previous support, which is bullish).

Now, is this enough off of which to build a trading system?

There are a few problems with this. Let’s say you were going to trade an uptrend that was formed by HHs and HLs. Price starts going up and forms a high, and then it starts retracing.

You are going to wait for the HL and then go long, but there is a problem: how do you know when price is done retracing and is going to go back up? How do you know that retrace isn’t going to keep going down and form a lower low?

Did you enter yet?

Oh no, price formed a lower low! Looks like we’re not in an uptrend anymore.

Now we should be looking for a lower high to confirm the downtrend, right?

A LL followed by a HH?! How does that happen?!

People will come up with all sorts of rules, like:

– don’t enter long until a high, a HL, and another HH (this is supposed to “confirm” the uptrend)

– don’t enter long after more than 3 waves (as if after making 3 HHs, price won’t make another HH)

All of these rules are just things people make up because they don’t understand the random price of the market.

Sometimes price trends and makes beautiful HHs, HLs, and HHs. If you can figure out when to enter (because the HL can form at any point), you can make money as long as you get out before price goes against you. Be careful adding to winning trades because as soon as that retracement goes a bit too far, your winning trade can turn into a losing trade.

Sometimes price makes LL, HH, LL.

Sometimes price makes HL, LH, HL.

Price can do whatever it wants and doesn’t care what it has done in the past.

You will see people chime in on these kinds of discussions and say “well obviously you just don’t understand it” subtly implying that they do understand it, yet you will never see them make real time calls. I wonder why?

Price can go wherever it wants, and unless you know ahead of time that it’s going to make a LH or whatever, there’s no way to know that a HL will follow a HH. Here is a list of possible formations that can follow a HH:

(obviously a LH can’t follow a HH because a LH is formed when price is rising and if you’re already at an HH you can’t have a LH without some sort of low coming first).

Here’s a chart showing what can follow what. Start with the vertical column and go across to see if a certain formation can follow it.

This is a very active topic and I will likely revisit it in the future.

I encourage your comments and discussion about how to use HH/HL/LL/LH/DB/DT in your trading.

New Trading System: Comparing the Close with last 3 Days’ High or Low.

I have been testing out a new trading system that I came up while I was reading Suri Duddella’s book, “Trade Chart Patterns like the Pros”. This particular idea came across my mind during the first chart patterns that Suri describes how he trades in his trading book. First I noticed that he enters the market on the very next day after the pattern is complete and only if the price trades in the same direction. Then I began comparing the day’s close with last 3 days’ high or low, since he often mentions in the first pages how this specific chart pattern has provided positive signals. In the last weeks there have been numerous bullish and bearish signals that look quite promising according to the rules above. I’m testing this trading system on stocks and forex but I suppose it can also be applied to any other instrument.

Rules of the trading system.

There are 2 basic rules to trade long:

Close (C) must be higher than the highest high of the last 3 days. The signal is confirmed on the next trading day if the price trades above the high of the previous day.

Similarly, there are also 2 basic rules to sell short:

Close (C) must be lower than the lowest low of the last 3 days. The signal is confirmed on the next trading day if the price trades below the low of the previous day.

A stop loss order is recommended of course and in the case of long trades, we should usually set it below the most recent low. Respectively, the stop loss order for short trades should be set above the most recent high. Additionally, the trading system performance can be further improved by combining the rules above with other elements of technical analysis, like support and resistance levels, Fibonacci retracements, ascending and descending triangles or other formations.

Example in stock trading (Google)

The first long trade could have been initiated in June (A). After a retracement that lasted 5 days, a long green candlestick closed higher than the last 3 days’ high. On the very next day Google shares began trading close to the last day’s high. The system would instruct us to trade long as soon as Google stock traded higher than that high at about $570. The stop loss would be set at $550, although it would never be hit. According to your personal management of the trade, returns could have reached 35% if you held your position until GOOG hit $770.

Another profitable long trade could have happened in November (C). The gaining candlestick with an open gap right after the doji candlestick indicated an uptrend resume. Google stock traded above $670 (previous high) on the next day alerting traders to go long, although shares closed at the opening price. Still the uptrend has been confirmed and long positions have been favored in the last 2 months.

Obviously the system cannot make 100% correct predictions, far from it! That is why we would lose money if we traded long in late October (B). The green candlestick printed a close higher than the previous days’ high and GOOG stock printed new highs on the next day, but eventually shares collapsed below the support level of $670 in the following days. Hopefully a stop loss would minimize the losses.

(D) is a sell-short signal but I wouldn’t recommend following that signal. The frightening falling candlestick that shows a $100 decline of Google share price surely went south of the previous lows, but it also disallowed of a fruitful reward-risk trade. In order to trade short at $670 using a 2-to-1 reward-risk ratio, one should set a profit target at $460, having previously set a stop loss at $760! Good luck predicting a retracement back to the 2010 low!

Example in Forex (EUR/USD)

According to the rules of the trading system, a forex trader could have bought Euros in July (A) at 1.2340 when the currency pair printed new high following the long green candlestick. This kind of trading should be considered as long-term trading, given the fact that the stop loss would have been set 300 pips lower at 1.2040, leading to a similar profit target at least. EUR/USD did climb up to 1.3150 in September for about 800 pips profit.

A short trade signal is noted at (B). As Euro seemed unable to penetrate the resistance level at 1.3150, the third confirmation of that specific level added more value to the signal. Unfortunately for those who trusted the US dollar, Euro didn’t go much lower before managing to print new highs at 1.33 in the year’s end!

That was an introduction to a trading system that is still work in progress. I can’t yet comment on investing facts like ROI regarding the system, as no backtesting has been done. Hopefully I will have more news to share in future posts.

Jim entered the financial world by trading sports and now invests in US stock markets and forex, trying to buy low and sell high. Connect with Jim: StockTwits | TradingView.

hey mate, I just been looking for some similar ideas with my trading style and found your site, already kept on my favorites 🙂 thanks for share.

Hi Carlos, glad to hear that! Hopefully I’ll write some more posts soon.

hi Jim, can i have Open Low and Open High strategies.

Considering the above scenario , we may also see the 15 min chat to break recent High and Low breakout , with keepin sl at 30 Point below buy price , this will increase the result with good profitable.

If you imply using the strategy to shorter timeframes, by all means yes. Even better, apply the strategy intraday on the day that there’s a signal on the daily chart!

i find this strategy quite interesting …is there any update to this .

Unfortunately, I haven’t applied the strategy for a longer period.

Sir, in that case what should be our target for intraday?

I think you can set your profit target relative to your stop loss order for a 1:1 or 2:1 Reward/Risk ratio depending on intraday volatility.

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Binary option robot AGO

понедельник, 28 мая 2018 г.

Higher high lower low trading system

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понедельник, 28 мая 2018 г.

Higher high lower low trading system

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понедельник, 28 мая 2018 г.