The Daily Range Reversal trading strategy
Day trading daily price ranges
The daily high and daily low, along with the previous day's daily high and low, are critical reference points for day traders. These price levels help identify potential reversal points, and serve as significant support and resistance zones.
The Daily Range Reversal strategy (DRR) capitalizes on price reversals. Price reversals frequently occur near daily high-low levels. The strategy has very precise entry and exit rules.
Traders can use yesterday's daily range or today's daily range.
Traders using today's range must indicate the period over which the range is calculated. This period is called the observation period. The observation period (e.g. 00h00 to 12h00) is set directly in the NanoTrader chart. The daily range is indicated by the background colour in the chart.
Yesterday's daily range
This trading range is based on yesterday's high-low.
Today's daily range
This trading range is based on today's range as defined by the trader.
FREE Newsletter for Traders
New indicators, new strategies... everything you need to know.
You can unsubscribe at any moment.
Register nowPrice reversal trading signals
The strategy generates entry signals based on a two-candle pattern. The pattern identifies reversal opportunities around the daily high and daily low.
Buy signals
- First candle: the price crosses below the daily low. This indicates a potential oversold situation near a significant support level.
- Second candle: the price reversal occurs. The candle closes X ticks above the high of the first candle. X can be defined by the trader.
This example shows the cross (blue background) and the buy signal (green background).
Short sell signals
- First candle: the price crosses above the daily high. This indicates a potential overbought situation near a significant resistance level.
- Second candle: the price reversal occurs. The candle closes X ticks below the low of the first candle. X can be defined by the trader.
This example shows the cross (blue background) and the short sell signal (red background).
Closing positions
The Daily Range Reversal strategy has a price target order and a stop loss order to protect the open positions.
- The stop loss is automatically placed on the 10-period high-low.
- The price target is fraction of the daily range. The default setting is 50%.
Price target reached
This example shows a buy signal. The DRR strategy neatly identifies the price reversal. The high-low stop (red line) follows the position. The price reaches the price target (green line). The position is closed with a profit.
One loser, one winner
This example shows a short sell signal followed by a buy signal. The short sell position is closed by the stop loss. The long position reaches the price target and is closed with a nice profit.
Yesterday or today?
Trading based on yesterday's or today's price range can lead to significantly different results. The veracity of this statement can be seen in these two profit charts of the silver future. It cannot be deduced from this example that today's daily price range is always better.
Trader 2
This example shows the result of trading on yesterday's price range.
Use this FREE trading strategy
Follow these steps in the NanoTrader Full platform:
1. Open the chart of the instrument you want to trade.
2. Select the strategy in the "WHS Strategies" folder.
3. Activate "TradeGuard+AutoOrder" in the chart to trade semi-automatically or "AutoOrder" to trade automatically.
Open a trading account
Quick and easy account opening
Trade with an award-winning broker.
No monthly inactivity fee
FREE trading strategies and signals.
Unique trading store.
Open an account"The fair treatment, the fast customer service and the many webinars are also a reason why I don't look too much at the competition." - Detlef
"Your support is really great, I only know this from big companies like Amazon! The explanation is really great, thanks." - Sebastian