Larry Williams developed the idea of Smash Days. It’s a day which smashes through yesterday’s range and reverses a whole bullish or bearish series of recent days. The set-up is simple and objective, the trade is easy to understand.
The objective is to join a reaction move away from a new swing high or low.
The strategy has been optimised over the years and the rules I will follow are -
Today’s Close must be above yesterday’s Close
Today’s Close must be above preceding 5 days’ Highs
Set a sell order at today’s Low, valid for tomorrow only
Set a stop-loss at today’s High
Exit at the first profitable Close after 5 sessions or more
As of last night there are two viable Smash Day trades available for Monday from the 28 leading forex pairs - short GBP/NZD or long NZD/CHF. You will see immediately that these two charts are inverse versions of each other so not much to gain by trading both. My preference is to go for GBP/NZD, as GBP is a more heavily traded currency than CHF and this pair has a higher historic volatility. If the sell order at yesterday’s Low is triggered on Monday, I will look to exit at the first profitable Close from Friday 04/04 onwards. If the sell order is not triggered on Monday I will cancel it.
Do smash days work in forex? I programmed smash days exactly as Larry Williams traded them, the normal kind that you describe and also the hidden smash days which are continuation/breakout signals. They work on indices, but I couldn’t find a forex pair that they work on. Your rules are slightly different though, so maybe that helps.
Interesting - I’ve seen this done, once, with the trades “divided into two”, the first half of the position closing at the first profitable close after “x” days and the second half closing at the first profitable close after “y” days.
It’s very possible that Smash Days on low volatility pairs wil be stopped out too frequently to be worth the risk. Indices are highly volatile and are not mean-reverting like forex is.
When to exit is always the hardest decision. It’s possible to have a very high win rate if you close a Smash Day trade at the first profitable Close. This of course means a large imbalance between the loss in pips for a stop-loss versus the gain in pips for a win. Very often immediate profit-seeking like this throttles a trade before price has really moved. I didn’t really want these trades open for weeks and weeks so 5 days seems a decent compromise.
Mondays Close -
GBP/NZD short was not triggered today so this is cancelled.
Plenty of Smash Day set-ups printed today - almost all the AUD and NZD pairs, plus USD/CAD. Can’t take all the trades, and as AUD and NZD mostly follow each other, a trade on both would double the risk on what would basically be the same TA.
My preference here is for a slightly more varied programme for tomorrow - a buy order on AUD/USD, a sell on GBP/AUD, and a sell on USD/CAD. All valid for Tuesday only.