The PHPL- profitable trading strategy that I will discuss here is very simple and still profitable. It is basically useful for swing trading and sometimes for intraday as well. This is a trend following trading strategy. So this is a most profitable trading strategy for volatile and liquid instruments. It is useful for all instruments including indices, stocks, commodity and forex currency pairs.
PHPL-Profitable Trading Strategy Buy And Sell Rules
Now let’s go directly into the strategy rules. This trading strategy uses previous day high (PH) and previous day low (PL) as the level for the decision point.
When today’s price cross above the previous day high, a buy trade is initiated.
When today’s price cross below the previous day low, a short trade is initiated.
Reverse entry signal also triggers exit for ongoing trade.
Charting The PHPL-Profitable Trading Strategy
The whole method will be very much clear by the above chart example. These are 15-min intraday charts of Nifty 50 market index. When the market opens we plot previous day high and low in today’s chart. The green line indicates previous day high and red line indicates previous day low.
Now the rest is very easy to follow, we watch the price and wait for it to reach the green or red line. If the price cross green line, we buy and also exit any short positions. If the price crosses the red line we short and also exit any long positions.
How To Use PHPL Profitable Trading Strategy
PHPL Profitable Trading Strategy is one of the best strategies for traders to apply directly in their trading decision. This strategy can also be used as an auto trading strategy with suitable trading platform and brokers. The backtest results for 5-min intraday data of Nifty 50 index for last 4 years is available in the following video.
This strategy is also useful for identification of swing direction. When the price is above the PH, the swing direction is up. When the price is below PL, the swing direction is down. So this strategy can be a very good replacement for other swing direction tools like Heikin Ashi.
Caution With PHPL Profitable Trading Strategy
The PHPL Profitable Trading Strategy is trend following strategy so it can cause frequent losing trade when the security is non-trending or sideways. To filter if the market is trending or sideways click here.
When the previous day’s range PHPL is very large, the max possible loss will be high. To avoid this kind of drawdown one should wait for one day so that the day’s range normalized. With normal PHPL range, the max loss will be low and risk-reward will be favorable.
Watch Live Signal In This Video:
To download this strategy please click here