Trading Long at High of Day

[miracletech]

I'm interested in this issue specifically as it applies to trading the eminis, but I suppose trading individual stocks, forex, etc would be pretty much the same.

Suppose you are a day trader using a pretty tight stop of 10 ticks. Further suppose your general strategy is to look for a trend, wait for a retracement, then enter a trade in the direction of the trend when the retracement is over & the trend continues. The question is, is it wise to go long at the High of Day (HOD)?

From my experience the answer is NO and Yes. No, because it seems you get stopped out more often at the HOD than at other times. Yes, because when it does move in your direction, the move seems to be larger at the HOD than at other times.

And what about using the same strategy, but going short at the Low of Day (LOD)? This seems to be a wiser trade than going long at HOD. Because down moves in general seem to be more explosive than up moves. And of course current market conditions would generally favor shorts.

Any traders have any thoughts on this topic? Does anyone have any statistics?

Good Trading to all,
miracletech
TuffTrade- Day Trade Smart

 

[rathcoole_exile]

i do something similar, but my question about your method is how do you know that the current HOD is the ultimate HOD and not just an intermediary ?

I prefer to use a fixed trigger point. Typically I use Camarilla H4/L4 as my triggers,
ie on 18/11 if ES reaches 870.11 I'll go Long, and if it reaches 831.89 I'll go Short
(I use a resting Buy Stop to go Long and a resting Sell Stop to go Short)

I usually trade in multiple of 3 - take one third off at +1, one third at +2, move Safety Stop to breakeven and wait for a runner.

Typically I get
stopped out for a loss 1 trade in 10,
close for a scratch about 2 or 3 times out of 10,
close out +2 about 4 times out of 10
and get a runner 2 trades in 10

The important things is not to give in after the first trades lose or scratch. take every trade 'cos you can bet your last dolar that the one trade you decide to call it quits for the day will end up being a +30 runner !!

 

[new_trader]

It is never too high to buy and never too low to sell. But as RE pointed out, the HOD is exactly that, so if you went long at that point you would lose. The key to making money is recognising where the turning point is most likely to be/come. This is the only way you will be able to make money trading with a tight stop. Knowing and recognising the difference between a rally or reaction and a change in trend is important.