Something i notice many traders use

You don't know it's the low of the day until the price rises (pivots), falls back but not as low as 97.21, then rises again. At that point you've pivoted off a slightly higher low, can go long and set your stop just below the LOD, giving you a very limited loss if stopped out.

I also use stochastics for my entries, preferring to short from above the 80 line and go long from below the 20.

I rarely trade the first 20-30 minutes of the day because it generally takes that long to establish a high and low to work from.

 

So you wait until 9:20 or 9:30 and use the high and the low that occurred in one of those initial time periods to base your first entry?

 

How would your knowledge help in the price action of this:

http://www.elitetrader.com/vb/showthread.php?s=&postid=2214178#post2214178

 

Exactly...All stocks have their own personality they like to stick to. Some stocks ALWAYS break through highs and lows and some don't.

But that's a great answer right there.

 

Why not to reverse then?

 

Yes, there are many high probability strategies that use the high and the low of bars.

You must exclude today's high and low (or this bar's high and low) since you can know those with certainty only after the close.

Regardless, I use APS Automatic Pattern Search to find high probability setups. I ordered a few months ago a custom version that works only with the Highs and the Lows of bars, as well as, with the Close alone, since I'm not interested in the open. I get several high probability setups for my forex and equity trading if not every day, every other day.

One interesting observation I made is that those setups work best if the position is opened at the close of the day of the setup rather than the open of the next day.

 

That's a pretty common strategy.

 

Yes, that's my personal preference.

 

You have to note volume as well. Scanning new daily highs & lows may find you a stock in play that is getting sold or bought by an institution. You also have to look at the chart. Most of the new highs & lows are just chops. But those where it is obvious the stock has been accumulated or distributed around a tight price range and is now breaking out of it with decent volume is a good play.

 

What do you mean with "common"? Non-functioning?

It doesn't make any sense to use stop losses there.