The Higher High and Lower Low Strategy -

The Higher High and Lower Low Strategy

What is the Higher High and Lower Low Strategy

This strategy targets to try and catch the change in the market trends. Wait for the time when the market settles down, in order to make your trade. If a market is heading in the downwards direction, then investor needs to make a lower high and higher low. What you need to do; is put a buy stop the earliest high. Then, keep moving it down to every following high until it gets hit. Till the time you reach it, maximum chances are that market has shifted to an upward trend. Place your safety stop at the latest low. After done, continue its movement in the direction of increasing lows. When it reaches the hit, you will earn profit.If you enter a long at the time of the break of a higher high, there is a chance that you could get whipsawed. This is applicable when the market changes result in a small swing, inside the main trend. This why more than 1 time frame is selected, so that entrancement, pullbacks etc. can be ascertained.

Reason of success Using  The Higher High and Lower Low Strategy

The basic principle behind this is to join the stops. The increased momentum in the new limit results in earning profit. But, constant surveillance is important to take the benefit.

When to use  The Higher High and Lower Low Strategy

The profit making aspect of this strategy also depends on the time frame applicable on the trade. The higher high and lower low strategy is better applicable on longer time frames. It is virtually unmanageable to be used on shorter time frames; whereas on longer time limits it performs quite well.
How to identify higher high and lower low:

The higher high and lower low strategy can easily identify in the charts. But one needs to know when these occur:

  • Higher high exists when the price of the asset moves in an upward trend then get a new high. At the time this occurs, it is assumed that a strong upward trend has been established.
  • Lower low is the exact opposite of higher high. Once it becomes stable, strong downward trend will be formed.

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