The previous day high low breakout strategy refers to the day trading technique that provides traders with multiple opportunities to go either long or short. The main idea is to identify the trend in its most juicy state followed by a trending move. Just like any other day trading tactics, the previous day's high and low trading strategy requires processing a bunch of technical analysis data within a limited time frame. So, it can be quite complex for beginners though with high-profit potential.
Today, we are going to discuss all strategy pros and cons as well as ways to utilize it under real-market conditions.
The idea is quite simple. With this strategy, traders no longer need to track from 5 to 10-day ranges and keep the focus on the previous day’s recent range lows and highs instead. Every stock leaves a specific trait depending on the market operators trading the asset throughout the day. On the other hand, both bears and bulls tend to establish specific trading boundaries that limit a stock when moving in a specific direction.
The idea of the previous day breakout strategy is to keep an eye on those ranges and enter a market with either a long or short position while exploiting the range. To utilize the strategy, traders are supposed to meet the following requirements:
Like every trading strategy, the previous day's high and low technique has some advantages and disadvantages. The only thing you should always keep in mind is the fact that the strategy can be used mainly as part of a short-term concept.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.