Can anyone explain High-Low Trend Trading in plain English

[FTSEBOY]

Hi again,
I have been mulling over some literature that I downloaded from www.masteryoftrading.com and am trying to get my head round the "high-low trend trading strategy". What is confusing me is that first of all you put a BUY STOP at a peak (and a SELL STOP at the bottom) which doesn't make sense as if there is a downtrend then the polarity of the trade will be loss making. I realise that these STOPS are merely indicators to make an entry into the market but I just can't grasp it. Sorry to appear stupid but if anyone can find the time to explain that would be great.
Cheers
FTSEBOY
PS If anyone currently uses this strategy can they advise me on how successful it has been for them historically

 

[Trader333]

Hi Ftseboy,

Let's say you want to use a Higher High / Lower Low trading strategy.

So you decide that when the market reaches a new intra-day high + 1 point you will enter the market as a "Buy" or "Long" trade. The order to get yourself into the market is a "Buy Stop" order. To get out of this trade you would place a "Sell" order

"Stop" orders are a type of order that can be used to get you into a trade or if you are in a trade it will get you out of a trade.

The same applies to a new intra-day low but in this case you would place a "Sell Stop" order to get you into the market. To get out you would use a "Buy" order which could be a "Buy Stop" or a "Buy at Market"

In your example above for a downtrading market you would place a "Sell Stop" order once the market has made a new intra-day low. This strategy has mixed results as it works very well on trending days but is less successful on choppy days.

I hope this explains what you wanted.

Good Luck


Paul

 

[oatman]

The theory being that you will join stops and benefit from increased momentum into new territory.......dangerous; you need to be on your toes to take advantage. Could be a false break engineered by the big boys gunning for stops in order to get out into liquidity.
Confused? You will be!
Seriously though, keep the questions coming.

 

[waytogo]

Hi

I also bought Malcolm's future trading course some time ago. I don't specifically use his strategy but did find the course useful in many ways.

The strategy is aiming for is to catch the CHANGE in trend. So, say you are waiting to make your first trade of the day (not too early, I hope - let the market settle down) and the market is heading down, making a succession of lower highs and lower lows. You want to place a buy stop at the most recent high, and keep moving it down to each successive high until it is hit. Then when you are in, and the market has hopefully now changed to an uptrend, place your safety stop at the most recent low, and keep moving it up to succesive (rising) lows until it is hit and you have now (hopefully) made a profit.

Hope this helps

Waytogo

 

[Skimbleshanks]

Hi waytogo

I agree with what you say, but I would like to add the proviso that it does all depend on which timeframe you are trading. This strategy is better for the longer timeframes rather than the shorter ones. I'm sure it would be virtually impossible to work on the 1 min, yet on the 10 min it would be excellent.

The other thing about entering a long on the break of a higher high is that sometimes you will get whipsawed around a little IF the market is about to do a small swing within the main trend. That's why if you play with 2 or 3 timeframes, you can usually spot the retracements / swings / pullbacks and not get caught out unnecessarily.

 

[Trader333]

In the manual it is traded on 2 min bars.


Paul

 

[waytogo]

Hi

I decided not to mention the specific timeframe as I dont know how close we are to breach of copyright! However, I understand what you are saying skim, but I think it is horses for courses. What works for one person may or may not work for another. Malcolm Robinson appears to make a very good living out of his strategy, trading in the mornings only.

By the way, FTSEBOY, Malcolm is very good about answering questions specific to his course if you email him.

Waytogo

 

[Trader333]

The Higher High / Lower Low strategy is not the copyright of anyone and has been well documented by many traders all over the internet.

The particular way in which Malcolm uses it combines it with another filter which I have specifically not mentioned. In my view the key area of value in Malcolm's course is in money management and the way in which funds can be built up which I have also been particular not to mention.

As Waytogo says, Malcolm is exceptionally good at consistently making money trading the FTSE future.

Paul

 

[waytogo]

No offence meant, Trader333.

Waytogo