December 26, 2021 by admin
The weekly high and low break out strategy is one of the simplest and easy to understand. When combined with other elements, such as price action and the overall trend of the market, traders will be able to trade at ease without overcrowding their charts with tons of indicators.
The weekly high low break out method is not a new technique and is widely used by members of the trading community. What can make this method really profitable is when you apply your knowledge to the markets. Thus, simply buying and selling on the break out might not yield profitable results all the time. However, this can be improved when you use it in combination with your own trading experience.
What’s unique about the weekly high and low break out method is it’s simplicity. This strategy allows traders to bring their own analysis skills which can be used in addition to the method.
Let’s illustrate this strategy on the S&P500 CFD instrument shown below.
The chart above shows the 4-hour chart time frame. Although the levels plotted are the previous week’s high and low, eyeballing the chart can reveal a pattern.
In the 9-weeks that we see in the above chart we can see that there have been four profitable trades with two losing trades and three weeks of no trade at all. This method can be further tweaked by using price action methods and also understanding the broader market (ex: the bull market rally in the S&P500).
As mentioned earlier, this trading strategy is not suitable for all traders, especially beginners. Traders need to have some experience of the markets and most importantly build familiarity with the price action methods of trading.
Understanding the fundamentals in the market can be of great value addition as it can help you to understand if you are correctly positioned in the market or not.
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