It is one of the high probability intraday strategy that provides great returns with least risk.
I would pick stocks every day based on NR7 criteria and wait for the stock to break its previous day high or previous day low and then enter in the opposite direction expecting a failed breakout.
For example, in the above chart - Ambuja Cements on Friday 10/8/18, after market opened, the stock immediately started moving up and tried to break yesterday high. However, the stock did not move up further and I immediately place a short order for Ambuja with a trigger price as previous day’s low price.
I have an automated alert mechanism, where it would scan for such stocks and alert me when condition satisfies, and all I need to do is, just click on the execute button and relax. As its gonna place both target and stop loss for me, since its a bracket order.
The rules are simple:
- Prepare a watch list of stocks, preferably NR7 stocks (https://goo.gl/L9hL1e)
- If the stock break its previous day high first, then place a short order with trigger price as previous day low with stop loss as prev day high.
- If the stock break its previous day low first, then place a Buy order with trigger price as previous day High with stop loss as prev day low.
- Keep a fixed target of 1% and Exit.
Here’s the daily performance result of this strategy
I have been testing this strategy live since May 2018, it has a greater accuracy compared to other trend following system or break out system, because it works on failed breakout principles,* when a stock moves up and breaks previous day high and if its unable to move up further, the stock would witness more selling pressure *and when it breaks previous day’s low, then more selling pressure sets in which pushes the prices further down which helps us to make profits.