How to trade highs and lows of the day

Beginner Questions
1

How to trade highs and lows of the day?

2

I don’t know because when you wait till the end of the day to see what the high and low were, you can’t trade. It’s already the next day. Can you explain a little more about what your question is?

3

For any one day, there is a high and low. Use that as an indicator for the following day as a zone indicator, probably a supply and demand area. Draw two horizontal lines, which run across the chart where you can see what happened in the past and what could happen in the future.

For a breakout/reverting strategy my key indicator is the PSAR balls - set at 0.09 - 0.50 - which slightly lags one candle, but is a great visual aid to the S&D zones, and where to set your S/L It also helps to zoom out of the chart with a couple of button presses to see exactly the long term trend and which way the pair is trading currently, and where the high and lows are over a longer period.

IMO, this is a high probability strategy, particularly if you’re trading with the long term trend.

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4

Exactly which highs and lows you are talking about? Are you referring to support and resistance trading?

5

I agree with you too. If he had explained the matter in detail, it would have been very helpful to understand.

6

I use daily highs and lows for setting entry orders to virtually all my trend-following trades.

7

Hi @steve369 and @tommor,

I don’t know how your explanations of using prior day highs and lows can be assumed to be what the requestor wanted to know based on his description of “highs and lows of the day” not “highs and lows of the previous trading day”.

@tombeni_62,
Please come back and clarify if the other guys interpreted your question correctly.

8

I saw that you had already highlighted the issue of using the high/low of the on-going current day, I didn’t think it needed re-iterating. But I did want to point to an alternative use of daily highs/lows which I do use. I thought it might draw the requestor away from the impression that today’s high/low can be identified as it prints, though he hasn’t definitively said that’s what he wanted to do.

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9

Apart from my explanation above, there are breakout strategies at the time of a new market opening time, but based on the previous market highs and lows which make a zone where price action is trading.

Following Tokyo Asian market, the opening of London market is a common breakout strategy used for GBP/USD. But because it’s so common, and utilised by hordes of retail traders, it’s effectiveness is not reliable.

I hope that clarifies - and answers the OP question.

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10

Ah Sarah. I am referring to both support and resistance - which tends to be used by swing traders in the main - and supply and demand trading, which is used by scalping, intra day, and daily traders.

The difference is whereby you could be hanging around for days waiting for a suitable S&R set up, S&D trading is riding the latest wave price action to where previous highs or lows occurred. Most suited for 5 -15m charts.

So, S&D is the high/low price action between S&R highs and lows.

2 Likes
11

Thank you for this nice explanation Steve, now I understand about supply demand trading.

12

everything comes with experience, and it is important for you to trade in the way that is convenient and understandable for you, and not according to someone’s advice

13

Oh yes, thanks for your response. By highs and lows of the day I mean the previous days highs and lows

14

Hi, I actually meant high and lows of the previous day

15

I’m well answered and thanks for the response

17
  1. If the price breaks below the low of yesterday’s candle, it may move further low.
  2. If the price breaks above the high of yesterday’s candle, it may move further high.
18

This looks like a simplistic saying but it has some truth behind it.

Where do you find price most often breaking yesterday’s low? - in a downtrend. And where is it most often found breaking yesterday’s high? - in an uptrend.

Trend is the most important TA pattern and its going to be very hard to make money if you ignore trend.

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19

Use support and resistance ideas to identify them. Daily highs and lows, hourly peaks and throughs, round levels etc. Start with basic ideas and then build more complex approach based on market “feedback” - losses and profits.

20

I have created and tested EA for opening trades automatically on prior high/low break and it was failing miserably.

From manual perspective, I would treat previous day High/Low in the same manner as other “levels”:

  • draw the line
  • wait until price goes near the line
  • change chart to lower time frame (anything between 1H to 1M)
  • check if level is anyhow respected - it can work as support/resistance causing the price to change direction (strong level) or it can be broken. If broken, price may freely continue in the same direction (level is not respected at all) OR pullback to the level and bounce. I believe entering on retest after break is very playable tactic.

Other examples of similar levels:

  • Daily Pivot
  • Round prices
  • 50% of prior day candle
21

If price breaks the previous high look for buying opportunities.
If it breaks the previous low look for Sells all depending on your own strategy of course