Grow Your Trading Account Up To 266x

Trade Big Cap Stocks Like Apple, Amazon and Tesla.

Learn More
ETF Strategy That Made Over 1291% Profit In Less
Than 7 Years!
Take all the guesswork out of what to trade, when to trade and how many shares to trade.

Learn More
Swing Trading Set Ups That Really Work!
Discover a proven approach for capturing big price moves with high probability swing trading
tactics.

Learn More
Recent Articles

Bollinger Bands Strategy – How To Trade The Squeeze

Swing Trading Tactics – Lagging and Leading Indicators
Trading 20 Day Exponential Moving Average
Best Technical Indicators – Learn The Stair Step Method
How To Track Volatility With VIX Index
Introduction to Historic and Implied Volatility
Swing Trading Indicators
Simple Trading Strategies – The 2X Inside Day Strategy
MACD Chart Divergence Analysis
Trading Strategies – Momentum Breakouts
52 Week Pop Strategy
Learn To Day Trade With The 52 Week Pop Strategy
Today I’m going to teach you a great momentum strategy. This is one of the first strategies I
teach people who want to learn to day trade Stocks, Futures and Forex markets.

One thing I observed over the years is markets tend to get volatile when they approach and
break through the 52 week high/low price point.

The reason for this volatility is because the 1 year high/low area is the center of focus for many
traders including professional hedge funds and mutual funds who put a lot of weight into the 52
week high/low price.
The Basis For The Set Up
A while back before the time when everyone had access to the Internet and traders were a bit
less sophisticated, the 52 week high/low point was known as a breakout point where markets
broke out and continued moving in the same direction with continued momentum.

With time as more traders caught on to this method to buy as well as sell near the 52 week
high/low price, markets began demonstrating more and more false breakouts near this price
level.

As a result the 52 week high/low began losing all credibility as having any type of edge that
could benefit traders or increase their odds of winning.

Different Way To Trade 52 Week

High/Low
After several years of monitoring how markets behave near the 52 week high/low price levels,
professional traders realized more often than not markets hit the 52 week high/low area and
pulled back before once again approaching the area and breaking out with strong momentum
the second time around.

To take advantage of this price action, I created a great day trading strategy that uses the 52
week high/low price points without subjecting me to the draw downs and pullbacks that occur
near these price levels.

Find Markets That Touch Their 52

Week Price High/Low Level
You want to start by finding Stocks, Futures or Forex markets that are touching the 52 week
high/low price level.

You want to find markets that are not edging slowly towards the 52 week level but are
gravitating towards that level with increased volatility and momentum.
The more volatility and momentum you notice near these levels at least initially the better. In this
example you will notice how the stock approaches the 52 week level like a magnet.

You should also make sure the markets you pick have sufficient volatility under normal trading
conditions; therefore you should pick your markets carefully.

This Stock Really Wants To Hit The 52 Week High Level

Monitor Market After False Breakout

Once the market hits the 52 week high/low level you should see an instant pullback away from
that price range.

The market should then take anywhere from 1 to 3 weeks to consolidate and try again the
second time to break through the 52 week price high/low level.
In this example the stock quickly pulls back and consolidates for about 2 weeks before trying
once again to reach for the 52 week high level.

The Stock Pulls Back And Consolidates For Two Weeks

 Monitor Entry Levels

As you monitor the market daily notice and keep track of the high that was made the day the
market made the 52 week high/low price initially. Your job will be to enter an entry stop order
each day $0.25 cents above that initial 52 week high/low price.

You only want to enter the order for the first hour of the trading day. The breakout that should
follow should be very powerful and tends to occur near the opening bell.

I rarely see breakouts that occur late in the day that have sufficient momentum to make the
trade worthwhile. If you are not filled during the first hour of the trading day you should cancel
your order ASAP.
You can see in this example how the stock gaps up and doesn’t turn back down. The volatility
should be similar to what you saw during the first time the breakout occurred.

The Stock Rallies About $3.00 After The Second Breakout

Intra-day View Of The 52 Week Pop

Strategy
In this example you can see the entire trade progression from beginning to end. The entry
occurs $0.25 higher than the 52 week price high. In this case the gap occurred at the opening
bell and we were filled substantially higher than $0.25.

This is not something you should be too concerned with because usually momentum coming
from gaps near the 52 week high levels tends to follow through similar to this example.

Once you are filled you need to place your stop loss order below the low that was made the day
prior to your entry.
The 15 Minute Bar Charts Works With Stocks

52 Week Low Example

In this example you can see how the stock makes the initial 52 week low. This is when we begin
monitoring the stock for the next 1 to 3 weeks to see if it pulls back up and goes for another try
to break through the 52 week low level.

I suggest you trade to the downside just as often as you trade to the upside.

The momentum is typically stronger and quicker to the downside as opposed to the upside the
majority of the time.
We Begin Monitoring The Stock Once It Makes The Initial 52 Week Price Low

In this example the stock only pulled back for 6 days. The pullback is usually quicker to the
downside as well. Notice how the breakdown below the 52 week low was volatile and once
again started with a small gap.

The gap is not a necessity but you will see it often when trading this strategy. The second
breakout below the 52 week low tends to carry strong momentum.
The Stock Gaps Down And Continues Moving Down Till The End Of The Day

The Entire Sequence Intraday Chart

You can see the entire sequence of the trade to the downside. In this example I use two
different stocks but the 52 Week Pop Strategy works just as well with Commodities, Futures and
Currencies.

I’ve been trading this strategy using Precious Metals and Currencies for over a decade with
consistent results.
The Stock Closes Near The Low Of The Day

Things To Keep In Mind

When trading the 52 Week Pop you should use 15 minute bar charts the day you intend to enter
the market when trading stocks. For other markets I tend to use 5 minute bar charts but stocks
respond well to 15 minute time frame.

I always use the daily chart to isolate the pattern and make sure that it’s setting up correctly.
Once the set up is correct and my order is entered I switch to the shorter time frame to make
sure the pattern is developing accordingly.

My stop loss is placed a few cents below the low prior to your entry day breakout day. The
market should never go back to this level if the trade is working out as planned. Also keep in
mind that you should never enter the trade after the first hour of the day.

This method thrives on momentum so if the market doesn’t start out that way in the morning the
odds are it won’t begin during the trading day.
Lastly, make sure you keep the trade open till the end of the day to give yourself the highest
odds of achieving maximum profit potential. For more on this topic, please go to: How To Learn
Day Trading and Best Day Trading Strategies – Momentum Breakouts
Have a great day!

By Roger Scott
Senior Trainer
Market Geeks