Previous Day High/Low

Look at yesterday's daily candle on any chart. The top of the candle/wick is PDH, the bottom is PDL. Most charting platforms also have 'Previous Day High Low' indicators that automatically draw these lines.

They work best for liquid stocks with significant volume (500K+ daily). For thinly traded stocks, these levels may be less respected. Index ETFs like XIU, SPY work very well with PDH/PDL.

It depends on market context. In trending markets, trade breakouts in the trend direction. In range-bound markets, trade reversals at PDH/PDL. Start by trading one style consistently before mixing.

When there's a gap beyond the level, the level's role changes. Gap above PDH means PDH is now support (buy pullbacks to it). Gap below PDL means PDL is now resistance (short rallies to it).

Yes, PDH/PDL trading works in TFSA. The moderate frequency (typically 1-3 trades per week) is generally acceptable. Very frequent intraday trading might be considered business activity by CRA - consult an advisor.

Real breakouts typically show: 1) Strong candle close well beyond level (not just a wick), 2) Above-average volume, 3) Follow-through in next few candles, 4) Alignment with larger trend. Weak wicks with low volume often fail.

Use 1-day (PDH/PDL) for intraday and short-term swing trades - more signals but less significant. Use 2-day or weekly high/low for higher conviction swing trades - fewer but stronger signals. Many traders watch both.

VWAP adds confirmation. PDH breakout + price above VWAP = strong long. PDL breakdown + price below VWAP = strong short. PDL bounce + price at/near VWAP = good long entry. Use VWAP as a filter for PDH/PDL signals.

Mid-morning (10:00-11:30 AM) and mid-afternoon (1:30-3:30 PM) are typically best. Avoid the first 30 minutes (noise) and last 30 minutes (MOC volatility). Opening hour tests of PDH/PDL often reverse.

Wait for clear failure: price breaks beyond level, then reverses and closes back inside the prior range. Enter in the opposite direction (short if PDH breakout fails, long if PDL breakdown fails). Stop beyond the failed extreme.

Use daily OHLC data. For each day, calculate prior day's H/L. Test: 1) Did price reach PDH/PDL? 2) Did it break or reverse? 3) What was the outcome? Track by market regime, trend direction, and time. Use walk-forward validation.

Test both tight (0.2-0.3% beyond level) and wide (opposite level) stops. Tight stops have smaller loss but get stopped more on noise. Wide stops give room but larger loss. Many traders use midpoint as compromise.

Inside days represent compression. When price finally breaks PDH or PDL after an inside day, the move is often more significant. Use larger targets and consider larger position size for inside day breakouts.

Components: 1) Pre-market level calculation, 2) Watchlist of liquid instruments, 3) Filters (trend, volume, gap), 4) Entry rules (breakout or reversal with confirmation), 5) Position sizing (risk-based), 6) Exit rules (target, stop, time).

In trending markets: favor breakouts in trend direction, use trailing stops. In ranging markets: favor reversals at both levels, use fixed targets at opposite level. Track recent breakout vs reversal success rate to identify current regime.