Signals Using Maximum / Minimum Prices

One type of signal you may find profitable to study is the behavior of maximum and minimum prices during a particular period of trading. I've found that some pretty reliable signals can be discovered by comparing maximums and minimums over time. What you'll need is an extensive set of historical price data and a willingness to test out various min/max iterations.

Just about the simplest signal to try is comparing the previous trading day's maximum or minimum price against the maximum or minimum for a selected preceding time period. What happens if the previous day's maximum exceeds the previous week's maximum? Or if the previous day's minimum drops lower than the previous week's minimum? How about the two preceding weeks, or the preceding month?

You can treat a given week's maximum or minimum the same way, for instance by comparing last week's max or min against the previous month's. Or try reducing the time scale and see what happens when the previous 15 minute period's max price crosses above the previous 4 hour maximum.

You get the idea - it really couldn't be more straightforward. Give it a try and I have a feeling you'll start discovering some profitable signals. Once you have, your next challenge is to trade them consistently - even after they've been wrong, which they inevitably will be every so often. Maximum luck to you!

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An Easy Signal Using Minimum Prices
An Easy Signal Using Maximum Prices