Previous Day High Break: how the strategy works
Previous Day High Break is a breakout strategy in the SmartPaperDesk library. See exactly when it enters and exits, and when it tends to struggle.
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What it does
It reads daily prices. It enters a position when all of the entry conditions below is true, and it leaves when its exit rule, its stop-loss or its time limit is reached.
Entry rule
All of these must be true on the same day:
- The close crosses above yesterday's high.
Exit rule
It exits when all of these are true:
- The close crosses below yesterday's low.
It also exits if price falls 8% below the entry (the stop-loss), or after 60 days at most.
The idea behind it
Breakout rules wait for price to close above a recent high, on the idea that leaving the old range can start a new move.
The bet it makes
It bets that a move above a recent high starts a run.
When it tends to struggle
Many breakouts fail: price pokes above the high and falls straight back. A tight stop limits the damage but can also exit on normal noise.
Test it on paper
You can run this strategy on historical, delayed daily data with estimated charges on the free plan. No real money and no real orders are involved.
Questions people ask
Is Previous Day High Break a buy signal?
No. It is a rule that describes a setup and has to be tested. A rule that fits one period can fail in another, so check it over a long period with costs included.
What does Previous Day High Break exit on?
The close crosses below yesterday's low. It also exits if price falls 8% below the entry (the stop-loss), or after 60 days at most.
Learn more
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SmartPaperDesk is an educational paper-trading tool. Strategy pages describe a rule only; they show no results and give no advice.
For educational purposes only. This is not investment advice. Past performance does not guarantee future results.