The daily high low forex trading strategy is based on one simple concept: if price breaks yesterday’s high or low, it will most likely continue in that direction of breakout. So this is a breakout trading strategy.
So how do you trade this then? Well here’s how…
- what you do is place 2 pending stop orders (buy stop or sell stop) to catch whichever direction the breakout happens.
Check Out My: Free Price Action Trading Course (no downloads or email required)
Currency Pairs: preferably the majors.
Timeframes: Daily but try 4hrs as well if you like.
Indicators: none required but you can download this daily high low forex indicator if you want: Yesterday High & Low v2.0
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TRADING RULES FOR DAILY HIGH LOW FOREX TRADING STRATEGY
- When yesterday’s daily candlestick closes, place two pending orders on both sides 2 pips away : one sell stop pending order to catch the breakout downward and one buy stop pending order to catch the breakout upwards.
- place your stop loss halfway distance of that closed daily candlestick.
- for take profit target, average the last 3 days range and use that as your profit targets. For example, if day 1 daily candle range (high-low)was 100 pips, day two had 150 pips and day 3 had 90 pips, then the average of these three days would be 113 pips. So 113 pips should be set as your take profit target.
ADVANTAGES OF THE DAILY HIGH LOW FOREX TRADING STRATEGY
- set and forget type of forex trading system where you only need to check once a day and see how your trade is progressing.
- this is a forex trading system for beginners because its easy to use and understand.
- this trading system stops you from over trading because seriously, less is more in trading. Why? Because if you take 10 trades in a day using smaller timeframes, you are most likely to suffer a lot of losses compared to taking only one trade based on the daily candlestick.
DISADVANTAGES OF THE DAILY HIGH LOW FOREX TRADING STRATEGY
- large stop loss distances so use position sizing to minimize your risk.
- all forex trading strategies as usual have limitations and this system is no exception so expect trading losses because sometimes the market will activate one pending order and next thing you know, price is going to opposite direction heading for your stop loss!
You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets. – Peter Lynch
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