Trading system Highest open Lowest open - intraday Zen
Where the student sees three movements,
an experienced master sees one.
Hello ladies and gentlemen, Forex traders!
Today we’ll talk about a popular strategy called Highest open Lowest open. It is based on following the natural movements of the market, which you may consider vile or unpredictable. Here, we will earn on those very movements. I immediately warn you, in this strategy you will have to wait, you will have to observe discipline, and carelessness can be expensive.
Currency pairs: any (low spread)
Timeframe: H1 + M5 + M1
Trading time: American session (from 8 a.m. New York)
Recommended brokers: Alpari, Roboforex, Tickmill
Idea of strategy
This strategy was first published on the forexfactory forum. Thanks to the author of the original thread - Tooslow. Obviously, the branch is quite popular, considering 519 pages of discussions, which means the strategy is of interest.
So what is the idea behind the strategy? If you have been following our site for a long time, you know, as I always say, that the strategy should always be based on some idea, that is, on the basis of what premise we draw up the rules, observing which we are trying to profit from the market.
In this strategy, the idea is as follows. There are two prerequisites. Firstly, chaotic zigzag price movements are always present inside the day, at first glance. Secondly, any candle, be it bearish / bullish, will have tails. Thirdly, someone needs to be cut out of the market. As we recall, there are bulls, bears and there are pigs, as described in many famous trading books. So, pigs usually go to slaughter.
Now, let's try to combine these prerequisites, just familiarizing yourself with the strategy, and you yourself will understand what's what. So, here is the GBPUSD H1 chart and, first of all, in MT4 you should press the key combination Ctrl + Y to display period separators (marked candles at the beginning of the day).
1) So, we mark on the chart the High / Low points of the current day and the previous one.
2) After that, at the current day, we note the highest and lowest points of the opening of candles H1. This refers to the price of opening a candle, not high or low. The indicated opening points during the day can and will shift, and this is normal. Strategy inputs are quite short, and such a markup shift can occur during the day. At this (at the moment) our markup is completed.
When will we buy or sell? So, we buy when the price goes below the bottom line and comes back. That is, when the price is behind the line (for example, behind the bottom), we place a Buy Stop order on the line to enter its breakdown. We enter the sale according to the same principle: the price goes beyond the top line, we place an order at the border, inside the channel. It is not necessary to use a pending order for this, if you want, you can enter the market.
But how to understand that the price has really been below the lower level, or above the upper? Indeed, it may well be that the price will break the level by only one point, which, of course, will not be a signal to the entrance. But, just for this, we have the concept of an “input timeframe”, which can be M5, M15 or M1. Following the original branch, it is the M5 timeframe that seems most suitable.
So, when the candle M5 closes above the signal line and, accordingly, a new candle M5 opens, we can enter the sale upon reaching the level. The same is true for the purchase. Candle M5 should close below the signal level, and at the opening of a new candle, set a pending order. Or, we wait until the level is reached and enter the market. At the same time, the opening price should not exceed the maximum and minimum of the day!
The nuances of trading, TP and SL, money management
- The time to start trading, as already mentioned, is 8 am New York (16:00 Moscow time). This is how the author trades, but you, in principle, can trade at almost any time. Since everyone has different time zones, you can choose the right trading time for you, and the strategy will work anyway.
- We set stop loss for the daily maximum, or for the daily minimum. With stop loss, everything is simple.
- The way profits are taken may vary. Firstly, there is such a basic rule: when a trade is in profit +5 points, we transfer the stop to breakeven +1 point profit. In order not to do this manually, you can use the automatic adviser from our website - work with breakeven. Secondly, you can exit with a profit of 10 points, or when you reach a profit of 10 points or more, transfer the stop to breakeven +5 points. Also, you can exit parts of the position in parts - this is out of personal preference. But, the rule to transfer the stop to breakeven is better to observe.
You can also apply a trailing stop.
- So, why did we celebrate the hi-lo of the previous day? If the maximum or minimum of the previous day is broken, this means that a breakdown has occurred and it is worth being careful. It is possible that the price after the breakdown will run far beyond the marked level.
- Also, a situation with several entrances within one hour is quite possible. If the price of the M5 constantly breaks the level and returns, you can enter with every suitable signal.
Since the profit in most cases is small, it is better to use low spread pairs in trading. So you can quickly translate the stop to breakeven.
Another point. If you intend to trade market orders, keep in mind that you need to enter the purchase at the Ask price. We enter the sale at the Bid price, which, in fact, is displayed on the chart.
- There can be a lot of strategy inputs during the day. Especially if you use several pairs. Therefore, there is no sacred meaning to risk more than 1% per transaction from capital. Moreover, it is better to use 0.5%. To calculate the risk on our website in the “Tools” section there is a lot calculator.
You can do the markup manually, or use the indicator from the original strategy branch.
On the chart, the indicator displays:
- Previous day minimum
- Previous day high
- The lowest opening of the previous day
- The highest discovery of the previous day
- Current day opening point
- Current high
- Current low
- Also, opening levels from different TFs are shown.
In the upper left corner, local time, server time and GMT are shown. Also, the current spread and the remaining time until the close of the bar are shown. The indicator settings are intuitive, so unnecessary values can be removed.
Now let's look at a few examples. On the H1 chart, we mark the highest opening point, and go to the M5 chart.
Here, we see how the price closed behind the level, below the maximum of the current day. On breaking through the level we enter for sale. Stop loss is set slightly above the maximum of the day. Upon reaching a profit of 5 points, turn on the trailing stop. In this transaction, we would have earned approximately 50 points, with an initial stop of 10 points.
With each new candle on the H1 chart, we check if it is time for us to change the markup. In this case, we have a new lowest opening of the current day, so we set the level at the opening of a new hourly candle. Also, the minimum has changed. On M5 there is a close below the level, so we enter the buy when breaking up. The deal, unfortunately, was closed in the footsteps.
This is how it looks on H1.
Again, move the level to the opening of the next candle, and wait for the intersection on M5. This, in fact, is the process of trade.
Once again, I note that we are talking about current daily highs and lows. Thus, if the highest or lowest open price changes, we move the markup accordingly. Also, when setting a stop, we take into account the current High and Low. If there is a breakdown of High or Low of the previous day, you should enter with caution, since the price may well tear towards the breakdown.
In conclusion, I offer you a challenge, which also offers the author of the strategy. The essence of the challenge is to trade 10 trades on one pair with a lot of 0.01 on a demo account fully complying with the rules of the strategy. Those who do this and put the report in the strategy thread on the forum will receive a special icon achievement. To receive the badge, you will need to apply for an award with a link to your post. After all, this is some incentive to comply with the rules 😉 That's all, see you soon!