One Rule Simple TradingView Strategy – Trade the Previous Day High/Low (With Free Code!)

Written by Fxigor in TradingView

When it comes to trading, simplicity often beats complexity. A well-structured yet straightforward strategy tested in TradingView can provide an edge by offering clear rules and repeatable setups. Many traders struggle with overcomplicating their approach, adding unnecessary indicators, or relying on gut feeling. However, a simple and tested system removes doubt and brings consistency to your trading.

By using TradingView’s built-in strategy tester, traders can evaluate how a strategy performs over historical data before applying it in live markets. This process helps develop confidence—knowing that your approach has statistical backing rather than being based on emotions or guesswork.

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One such strategy is the Previous Day’s High and Low Breakout, which leverages key price levels to identify high-probability trade setups. When combined with a structured risk management plan, even a basic strategy like this can become a powerful tool for traders looking for consistency.

In this guide, we’ll explore how to implement this strategy in TradingView and provide you with a free source code so you can test and refine it yourself. ?

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Buy, Sell Rules and Stop Loss & Target for the Previous Day High and Low Strategy

Buy (Long) Entry Conditions:

  1. The price closes above the previous day’s high.
  2. The previous candle’s close was below the previous day’s high.
  3. Once the conditions are met, enter a long position.

Sell (Short) Entry Conditions:

  1. The price closes below the previous day’s low.
  2. The previous candle’s close was above the previous day’s low.
  3. Once the conditions are met, enter a short position.

Stop Loss & Take Profit Rules

For Long Positions (Buy):

  • Stop Loss (SL): Placed at:
    Previous Day Low?(Stop Loss Multiplier?1)×(Previous Day High?Previous Day Low)\text{Previous Day Low} – (\text{Stop Loss Multiplier} – 1) \times (\text{Previous Day High} – \text{Previous Day Low})     

  • Take Profit (TP): Placed at:
    Previous Day High+Profit Target Multiplier×(Previous Day High?Previous Day Low)\text{Previous Day High} + \text{Profit Target Multiplier} \times (\text{Previous Day High} – \text{Previous Day Low})     

For Short Positions (Sell):

  • Stop Loss (SL): Placed at:
    Previous Day High+(Stop Loss Multiplier?1)×(Previous Day High?Previous Day Low)\text{Previous Day High} + (\text{Stop Loss Multiplier} – 1) \times (\text{Previous Day High} – \text{Previous Day Low})     

  • Take Profit (TP): Placed at:
    Previous Day Low?Profit Target Multiplier×(Previous Day High?Previous Day Low)\text{Previous Day Low} – \text{Profit Target Multiplier} \times (\text{Previous Day High} – \text{Previous Day Low})     

This strategy dynamically adjusts stop loss and takes profit levels based on the previous day’s range and configurable multipliers.

DOWNLOAD STRATEGY – COPY CODE in PineScript

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//@version=5
strategy("Previous Day High and Low Strategy with SL/TP Toggle and Dynamic SL", shorttitle="PDHL SL/TP Toggle Dynamic SL", overlay=true, initial_capital=10000, default_qty_type=strategy.percent_of_equity, default_qty_value=10)

// Input options for strategy optimization and toggles for visualizations
profitTargetMultiplier = input.float(title="Profit Target Multiplier", defval=2.0, minval=0.1, maxval=100.0, step=0.1)
stopLossMultiplier = input.float(title="Stop Loss Multiplier", defval=1.0, minval=0.1, maxval=100.0, step=0.1)
showSLTP = input.bool(title="Show SL/TP Lines", defval=true)

// Fetching the previous trading session's high and low
prevDayHigh = request.security(syminfo.tickerid, "D", high[1], lookahead=barmerge.lookahead_on)
prevDayLow = request.security(syminfo.tickerid, "D", low[1], lookahead=barmerge.lookahead_on)

// Plotting the previous day's high and low for visual reference
plot(prevDayHigh, "Previous Day High", color=color.green, linewidth=2, style=plot.style_stepline)
plot(prevDayLow, "Previous Day Low", color=color.red, linewidth=2, style=plot.style_stepline)

// Entry conditions based on price crossing over/under the previous day's high/low
longCondition = close > prevDayHigh and close[1] < prevDayHigh
shortCondition = close < prevDayLow and close[1] > prevDayLow

// Dynamic SL and TP calculation based on multiplier
float longSL = na
float longTP = na
float shortSL = na
float shortTP = na

// Adjusting the SL based on the stopLossMultiplier
if (longCondition)
    longSL := prevDayLow - (stopLossMultiplier - 1) * (prevDayHigh - prevDayLow)
    longTP := prevDayHigh + profitTargetMultiplier * (prevDayHigh - prevDayLow)

if (shortCondition)
    shortSL := prevDayHigh + (stopLossMultiplier - 1) * (prevDayHigh - prevDayLow)
    shortTP := prevDayLow - profitTargetMultiplier * (prevDayHigh - prevDayLow)

// Execute trade entries with dynamic SL and TP
if (longCondition)
    strategy.entry("Long", strategy.long)
    strategy.exit("Exit Long", "Long", stop=longSL, limit=longTP)

if (shortCondition)
    strategy.entry("Short", strategy.short)
    strategy.exit("Exit Short", "Short", stop=shortSL, limit=shortTP)

// Conditional plotting for SL/TP outside local scope
plotshape(showSLTP and longCondition ? longSL : na, title="Long SL", location=location.absolute, color=color.red, style=shape.cross, size=size.tiny)
plotshape(showSLTP and longCondition ? longTP : na, title="Long TP", location=location.absolute, color=color.green, style=shape.cross, size=size.tiny)
plotshape(showSLTP and shortCondition ? shortSL : na, title="Short SL", location=location.absolute, color=color.red, style=shape.cross, size=size.tiny)
plotshape(showSLTP and shortCondition ? shortTP : na, title="Short TP", location=location.absolute, color=color.green, style=shape.cross, size=size.tiny)

 

This TradingView Pine Script strategy trades based on the previous day’s high and low breakouts, with dynamic stop-loss and take-profit levels. Let’s break down the code section by section:

1. Strategy Settings and Inputs:

Pine Script

//@version=5
strategy("Previous Day High and Low Strategy with SL/TP Toggle and Dynamic SL", shorttitle="PDHL SL/TP Toggle Dynamic SL", overlay=true, initial_capital=10000, default_qty_type=strategy.percent_of_equity, default_qty_value=10)

profitTargetMultiplier = input.float(title="Profit Target Multiplier", defval=2.0, minval=0.1, maxval=100.0, step=0.1)
stopLossMultiplier = input.float(title="Stop Loss Multiplier", defval=1.0, minval=0.1, maxval=100.0, step=0.1)
showSLTP = input.bool(title="Show SL/TP Lines", defval=true)
  • //@version=5: Specifies the Pine Script version.
  • strategy(...): Defines the strategy with its name, short title, overlay setting (displays on the chart), initial capital, and default quantity settings (10% of equity per trade).
  • input.float(...): Creates input options for the user to adjust the profit target multiplier (default 2.0), stop-loss multiplier (default 1.0), and a boolean toggle to show/hide the stop-loss and take-profit lines.

2. Fetching Previous Day’s High and Low:

Pine Script

prevDayHigh = request.security(syminfo.tickerid, "D", high[1], lookahead=barmerge.lookahead_on)
prevDayLow = request.security(syminfo.tickerid, "D", low[1], lookahead=barmerge.lookahead_on)
  • request.security(...): This function fetches data from a different timeframe. Here, it’s retrieving the daily (D) high and low.
  • syminfo.tickerid: The symbol of the current chart.
  • high[1] and low[1]: The high and low of the previous day.
  • lookahead=barmerge.lookahead_on: This is crucial. It prevents the strategy from “peeking into the future” and repainting. It ensures the strategy only uses data that would have been available then.

3. Plotting Previous Day’s High and Low:

Pine Script

plot(prevDayHigh, "Previous Day High", color=color.green, linewidth=2, style=plot.style_stepline)
plot(prevDayLow, "Previous Day Low", color=color.red, linewidth=2, style=plot.style_stepline)
  • plot(...): Plots the previous day’s high (green) and low (red) on the chart as steplines.

4. Entry Conditions:

Pine Script

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longCondition = close > prevDayHigh and close[1] < prevDayHigh
shortCondition = close < prevDayLow and close[1] > prevDayLow
  • longCondition: Checks if the current close is more excellent than the previous day’s high and the previous close was less than the previous day’s high (a breakout).
  • shortCondition: Checks the opposite for a short entry (breakout below the previous day’s low).

5. Dynamic Stop-Loss and Take-Profit Calculation:

Pine Script

float longSL = na
float longTP = na
float shortSL = na
float shortTP = na

if (longCondition)
    longSL := prevDayLow - (stopLossMultiplier - 1) * (prevDayHigh - prevDayLow)
    longTP := prevDayHigh + profitTargetMultiplier * (prevDayHigh - prevDayLow)

if (shortCondition)
    shortSL := prevDayHigh + (stopLossMultiplier - 1) * (prevDayHigh - prevDayLow)
    shortTP := prevDayLow - profitTargetMultiplier * (prevDayHigh - prevDayLow)
  • float longSL = na, etc.: Declares variables to store the stop-loss and take-profit levels. na It means “not a number” and is used to initialize them.
  • The if blocks calculate the SL and TP based on the stopLossMultiplier and profitTargetMultiplier inputs. The SL is calculated relative to the previous day’s range, and the TP is a multiple of that range above or below the entry point. Notice how the SL is adjusted; a stopLossMultiplier of 1 means the SL is at the opposite end of the daily range, while a multiplier of 2 would double the range.

6. Trade Execution:

Pine Script

if (longCondition)
    strategy.entry("Long", strategy.long)
    strategy.exit("Exit Long", "Long", stop=longSL, limit=longTP)

if (shortCondition)
    strategy.entry("Short", strategy.short)
    strategy.exit("Exit Short", "Short", stop=shortSL, limit=shortTP)
  • strategy.entry(...): Enters a long or short position when the corresponding condition is met.
  • strategy.exit(...): Sets the stop-loss and take-profit orders for the open position. The names “Exit Long” and “Exit Short” must match the entry names.

7. Plotting SL/TP Lines (Conditional):

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Pine Script

plotshape(showSLTP and longCondition ? longSL : na, title="Long SL", location=location.absolute, color=color.red, style=shape.cross, size=size.tiny)
// ... (similar plotshape calls for longTP, shortSL, and shortTP)
  • plotshape(...): Plots shapes on the chart.
  • The conditional showSLTP and longCondition ? longSL : na means the shape is only plotted if the showSLTP input is valid and met. Otherwise, it plots na (nothing). This makes plotting SL/TP optional.

Key Improvements and Explanations:

  • Dynamic SL/TP: The stop-loss and take-profit are calculated dynamically based on the previous day’s range and the multiplier inputs. This is a more sophisticated approach than fixed SL/TP levels.
  • Lookahead Bias Prevention: The lookahead=barmerge.lookahead_on argument in request.security is essential for preventing repainting. This ensures the strategy’s backtesting results are realistic.
  • SL/TP Toggle: The showSLTP input allows the user to turn the plotting of the SL/TP lines on or off, which can help keep the chart clean.
  • More apparent Variable Names: More descriptive variable names (e.g., longSL, longTP) improve readability.
  • Comments: The code is well-commented, making it easier to understand.

This strategy aims to capitalize on short-term breakouts of the previous day’s range with dynamically adjusted risk management. Remember to thoroughly backtest and optimize the strategy’s inputs before using it with real capital. Past performance is not indicative of future results.

Fxigor
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Fxigor

Igor has been a trader since 2007. Currently, Igor works for several prop trading companies. He is an expert in financial niche, long-term trading, and weekly technical levels. The primary field of Igor's research is the application of machine learning in algorithmic trading. Education: Computer Engineering and Ph.D. in machine learning. Igor regularly publishes trading-related videos on the Fxigor Youtube channel. To contact Igor write on: igor@forex.in.rs

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