Some general testing I’ve done over 3 years indicates that for the EURUSD the optimal Take Profit/Stop Loss is 50/90 pips on the daily, as long as all trades are being opened at 00:00 GMT and closed after 24 hours. 50/50 wasn’t much worse though. But a clever employment of a trailing stop loss should produce better results.
What trailing stop would you suggest. I’m going to try with 10 pips but it seems quite tight.
Had to dig some to find this thread.
I have run a test on a very similar idea with good results.
This is on EUR/USD only. I tested back to June 2010 so its not the longest test. I tested it by scrolling through a chart and measuring the trades with the cross-hair on MT4.
My chart closes the daily candle at the end of the New York session.
At the end of every day I look to see if the candle that just closed has a lower range then the one before. If it does a pending buy at the high and sell at the low go in. one trade acts as a stop for the other(fifo and no hedging for me). If I have 2 long trades open and get a candle that calls for pending orders I would size the orders with one long trade and 3 short trades. If the short were triggered it would close all my longs and leave me with one open short. If the long triggered I would add one long trade.
Some times both trades are triggered then the loss is the range of the signal bar. This seems to happen less on EU then other pairs. On the other pairs I looked at both pending orders got triggered enough that it makes the strat to risky for me.
I had around 85 trades in 8 months. about 40 were wins, the average win was about 185 pips the average loser was about 65 pips. I didn’t use a take profit just added trades until a pending order triggered in the other direction.
That’s interesting that you would bring up this old thread. I was just thinking about it last night. As you know I’ve been trading something sort of like the opposite of it lately and doing ok. Here’s what I was thinking about this daily hi low. As soon as price breaks through the previous days high or low trade in that direction with something like a 30 pip take. Stop loss would be real tight just the back side of the entry line. You may get a few small stops but when momentum is there you will get your take profit. I also thought about using for a stop, the same distance that price moves beyond the line if it doesn’t hit your take. Or for a stop, if price comes back inside the line then close at the close of the 15m candle that goes against you. or what ever time frame you choose.
Master Tang told me something some time ago that also may be useful not only on it’s own but also as a tool to gauge momentum turning points in a strat like this daily hi low.
Hi Talond,
I’m fairly new to Forex, and having registered with babypips came across your HiLo system. I like the fact that it is a straightforward system, and one that you can set and leave. Can I just say having demo traded this system last week, I am very impressed with the results. I wondered if you would be so kind to answer a few questions about it, so I can get it fully clear in my head, and don’t do anything stupid!! lol
Are you still trading with this system?
Are you still using the 20 TP and 40 SL, or have you revised these figures?
What high/low do you use when setting up the trade to open on a Monday, or the day after the market has been closed for a public holiday?
What if the high/low of the day is when the daily candle closes? This will prevent setting 1 of the pending trades?
Are the trades still best purely on GBP/USD, or have you done any delving on other pairs?
What is the % of trades that are profit making?
Many thanks for your time!
Mark
PS! I did send this to you as a visitor message, but not sure if it got to you.
Hi I see the visitor message but didn’t get a notification of it. Wouldn’t have known it was there if you hadn’t said so. Wow this is an old thread. Actually I’ve had some success trading pretty much the opposite of this. Put a 2 period MA set to high and another set to low on a daily chart. When price is near one of those extremes then trade it back the other way, target half the daily range to be conservative. Watch those long momentum candles though, they tend to continue rather than reverse. I’ve traded lots of different pairs that way with a high win rate. One of my favorites was Usd/Zar 
currently learning an interesting form of s&r to enhance that method.
To answer your questions on this strategy, the best thing to do is just do it and see what works best for you. I think it was JJ somewhere up there mentioning the 7am to Noon GMT time. That’s early London and look for momentum there during prime time.
I’m still reading through this thread.
Interestingly, I performed a quick 100-sample backtest on the AUDUSD from 2001 to early 2003. I looked out for strong momentum candles i.e. those with a long solid body with small wicks. I used the fib tool to measure a candle and classified it as tradable if the open and close occured outside the 78.6% and 23.6% levels. Entry = break of the daily high if the momentum candle is bullish, break of daily low if the candle is bearish.
I used an volatility-based stop loss (0.5 * ATR(14)).
Results were very disappointing. A 2:1 reward:risk ratio seemed best, but offered only an expectancy of 2.9% after spread. That’s bugger all. Most other R:R ratios were slightly negative.
Cheers for the quick reply.
Don’t forget at the moment I’m still learning, so I’m a bit thick where some of the terminology is used lol
Setting MAs I have no problem with, but what is classed as High and Low?
Is there another thread which discusses this in more detail that I could have a look at?
BTW got another +20 last night on the hilo method!
Thanks again!
No thread that I know of so I’ll post a quick pic here. I had to edit this post, don’t know why I didn’t think of it before but there is a thread like this. Look for a thread called MMTT by Ruilima.
This is very discretionary, you may or may not like it. There are no concrete rules. Well I had difficulty posting a picture. There’s 2 MAs on that one, a 2 and a 4 but that’s just some indicator that does that. Just a 2 is good enough. When you put a moving average on a chart on mt4 it gives you the option of putting it on the high of price or the low so put one of each. When price is near the upper MA sell it, when it’s near the lower MA buy it. I always made my profit target about half the daily range. It has a high win rate but you have to watch out for the few losses that get out of hand.
Good luck and golden pips! 
Hello TalonD. Been a long time anyone has been on this thread - but hoping I might have some luck. The strategy you describe here is some that I’m giving serious thought to. Something quite simple and can be set with pending orders. I just wanted to know if you were still trading this, if you had any further findings, if you had decided on TPs/SLs, tweaks, filters, best pairs etc. Really really appreciate your feedback, you can come back to me on this thread or PM me.