We published this trading rule on our blog almost 5 months ago, February 10 to be exact. You can look it up if you wish. With gold making all time highs on Friday, it seems like the perfect candidate for this rule. Just remember, there are no guarantees in trading.
I learned this rule over 3 decades ago in the markets from a low-key trader named Bill. Using his special trading technique, Bill made millions and millions of dollars from his office. The best part is that this technique is still working more than 30 years after it was taught to me and why I insist on sharing it with as many traders as possible.
Bill didn't even have a name for this killer trading technique and so I named it, "The 52-week new highs on Friday rule".
This technique has been working with amazing regularity. In the video, I show you that when a market is closing at a 52-week high on a Friday, you should go long. In case you missed it, and all of the rules, you can watch here.
When I hear people say that things have changed in the market and that they are completely different from what they used to be, I have to disagree. I think this is a good example why.
As always, our videos are free to watch and there are no registration requirements. Have you traded using the "52-week Friday rule"? If so, let us know how it went, but regardless of whether you have or not, leave your comments below.
All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub
Rob,
Thank you for your feedback.
I would still use Tuesday as an exit day in forex.
All the best,
Adam
Hi Adam,
In applying this rule to forex trading, when would you exit the currency position since the forex market starts trading Sunday evening EST and trades 24 hours a day. You stated for stocks to exit Tuesday morning when the stock market opened.
Thank you,
Rob
Staying away from this rule in gold for sure because Market Makers will surely try to wash the more recent investors out with a sucker rally & major sell-off one more time before the next major move higher. 12+ months worth of data bares this out in my opinion. Buy on a major pullback or stay away is the real play.
Hi Adam,
Thanks for further observations and post mortem. I'll be keeping an eye out for another opportunity. No guarantees--no problem.
jsaman
Bill, the method missed this one. That is the reality of all methods and systems. They do not always win. If you are going to trade you are going to have bad trades. The goal is to make sure you manage your money so that trades like this one do not break the bank.
Adam,
I tried this strategy with two gold-related picks and two equities, as follows:
GLD, DGP, CROX, NFLX. All were at or near their highs, and I took positions in each during the last half-hour of Friday's trading.
NFLX opened lower on Monday, so I exited the position. All three of the others opened higher, but eventually collapsed. I stayed in each until I was stopped out at a loss of roughly 3/4 ATR.
What should I learn from this experience?
Hold the position when stock opens higher and STAYS HIGHER, but sell as soon as price drops into negative territory?
Would a lower stop loss be better?
Or, was staying the course the best option, and this is just one of this times when following the rules doesn't work out?
I'd truly appreciate your candid assessment.
Best,
jsaman
Jsaman,
It was a difficult one to say the least.
What you want to take away from this is to not dismiss this one non profitable trade as the norm.
As I said there are no guarantees in trading. The market did not perform as it should have. The one piece of advice I can share with you is this, the gold market did not close at its best levels on Friday. In fact it closed $6 off its high for the day. I would have liked to have seen this market close 1 or 2 dollars off the high but not 6 dollars.
Keep the faith as this approach works well and puts the odds in your favor over the long term.
Adam
Adam
Hi Adam,
This rule intrigues me as well. My question comes from applying this rule to the forex market. Forex market closes at 5pm EST and opens Sunday evening (between 5-6pm EST depending which broker you use.) Since the forex market run 24 hours a day (Sunday evening to Friday afternoon)*****at what time EST Tuesday morning would you exit this position after following these listed three rules?*****
Thank you,
Rob
Rob,
Thank you for your feedback.
I would use 9am on Tuesday morning EST to exit a position in the forex markets.
Here are the rules:
Here are the three rules you need to trade "The 52-week new highs on Friday rule"
These are the exact rules that Bill used to make millions
Rule number 1: On a new 52-week high, when the market closes at or close to its high on a Friday, buy long and go home long for the weekend.
Rule number 2: Exit the long position on the opening the following Tuesday.
Rule number 3: If the market opens lower on Monday, exit the position immediately.
There you have it. These are the only three rules you need to trade with "The 52-week new highs on a Friday rule" successfully.
"The 52-week new highs on a Friday rule" works extremely well in futures and in the Forex markets. This rule can be reversed for "The 52-week new lows on a Friday rule" if you are so inclined to trade the short side of the market. The same rules apply.
All the best,
Adam
Seems like it won't pan out this time. No strategy is perfect, but it's nice when others share their experiences. Helps us all to think outside the box with our own strategies at least.
Jsaman,
Thank you for your feedback.
If the market opens higher follow the game plan and that it exiting the position on the opening on Tuesday.
Here are the rules.
Here are the three rules you need to trade "The 52-week new highs on Friday rule"
These are the exact rules that Bill used to make millions
Rule number 1: On a new 52-week high, when the market closes at or close to its high on a Friday, buy long and go home long for the weekend.
Rule number 2: Exit the long position on the opening the following Tuesday.
Rule number 3: If the market opens lower on Monday, exit the position immediately.
There you have it. These are the only three rules you need to trade with "The 52-week new highs on a Friday rule" successfully.
"The 52-week new highs on a Friday rule" works extremely well in futures and in the Forex markets. This rule can be reversed for "The 52-week new lows on a Friday rule" if you are so inclined to trade the short side of the market. The same rules apply.
All the best,
Adam
Hi Adam,
As we head toward Monday's open, I realize there's one detail of this game plan that's unclear to me. If I'm in, say, GLD, and it opens lower on Monday, the plan calls for closing out the position and taking the loss.
But what if GLD opens higher? Would I set a stop at Friday's close, so if GLD dips lower at ANY TIME on Monday I sell? Or, do I give GLD some room to fluctuate on Monday as long as it OPENS higher?
Thanks,
jsaman
Hi Adam, I am planning to buy a contract of gold tonight at 6 when the futures market opens. Here is my question and I hope you will answer it for us today: When I do a "smart scan" for "52-week-high" I get 184 results. I will check the charts but I think this means that all of these made new 52 highs on Friday! Shall I pick some of them and put on trades for them also? Do I understand correctly from your video that they all have a greatly increased chance of going up on Monday? Thanks Adam! PS,on another note, I would love to see your video opinion about Silver in connection with gold and what we might expect. I have made some good money from AGQ!
Catherine,
Thank you for your feedback and comments.
I have found that the futures and Forex markets tend to be better indicators of the 52-week rule. That is not to say that this rule does not work in the equity markets.
Using our Smart scan technology easily shows you which markets are making 52 week highs or lows. This rule can be applied to shorting stocks as well as futures.
Here are the rules again:
Here are the three rules you need to trade "The 52-week new highs on Friday rule"
These are the exact rules that Bill used to make millions
Rule number 1: On a new 52-week high, when the market closes at or close to its high on a Friday, buy long and go home long for the weekend.
Rule number 2: Exit the long position on the opening the following Tuesday.
Rule number 3: If the market opens lower on Monday, exit the position immediately.
There you have it. These are the only three rules you need to trade with "The 52-week new highs on a Friday rule" successfully.
"The 52-week new highs on a Friday rule" works extremely well in futures and in the Forex markets. This rule can be reversed for "The 52-week new lows on a Friday rule" if you are so inclined to trade the short side of the market. The same rules apply.
All the best,
Adam
I am very new to trading being retired and approaching it as an interesting pastime. I spent 20 years in the military as an intelligence analyst and enjoy using some of my past learned skills.
I find the "rule" to be fascinating and gave some thought as to why it is so constant. I came up with the idea that it parallels "Newton's First Law of Motion that states that in order for motion of an object to change, a force must act upon it, a concept generally called inertia"
So the market in positive motion, (including all the "rule" stocks within it's body, sort of like a school of fish) will remain in motion in the same direction until the forces (profit taking) stop and reverse the direction. What is truly interesting is that the more this rule is known, and applied, the stronger it becomes for it feeds and strengthens itself. Comments?
Glen,
Thank you for your insightful comments they are truly helpful to our membership.
All the best,
Adam
Adam, is this rule supposed to work for shorting markets hitting 52 week lows on a Friday?
Charles,
The short answer is yes.
Here are the rules again:
Here are the three rules you need to trade "The 52-week new highs on Friday rule"
These are the exact rules that Bill used to make millions
Rule number 1: On a new 52-week high, when the market closes at or close to its high on a Friday, buy long and go home long for the weekend.
Rule number 2: Exit the long position on the opening the following Tuesday.
Rule number 3: If the market opens lower on Monday, exit the position immediately.
There you have it. These are the only three rules you need to trade with "The 52-week new highs on a Friday rule" successfully.
"The 52-week new highs on a Friday rule" works extremely well in futures and in the Forex markets. This rule can be reversed for "The 52-week new lows on a Friday rule" if you are so inclined to trade the short side of the market. The same rules apply.
All the best,
Adam
Yes I did try this trade not too long ago at the beginning of April with two ETF's, PALL and PPLT. I actually made a profit on both of trades (2% on PPLT and 9% on PALL) but I have to admit that I let the trade run too long (2 extra weeks) and did not get out when this trading rule said to get out. I just wanted to let the trend run in my favor. 🙂
I rememberd the commodities 52 week high rule and along with my other indicators not pointing to a top in spot gold I took the trade. Time will tell.
thanks Adam
APPL is at a 52 week High. (Got this from smartscan). This should be interesting.
<*####<
DOES THIS TRADING PLAN ALSO APPLY TO 52 WEEK LOWS ON A FRIDAY
Anthony,
Yes, this rule does apply to 52-week lows on Friday.
Here are the rules again:
Here are the three rules you need to trade "The 52-week new highs on Friday rule"
These are the exact rules that Bill used to make millions
Rule number 1: On a new 52-week high, when the market closes at or close to its high on a Friday, buy long and go home long for the weekend.
Rule number 2: Exit the long position on the opening the following Tuesday.
Rule number 3: If the market opens lower on Monday, exit the position immediately.
There you have it. These are the only three rules you need to trade with "The 52-week new highs on a Friday rule" successfully.
"The 52-week new highs on a Friday rule" works extremely well in futures and in the Forex markets. This rule can be reversed for "The 52-week new lows on a Friday rule" if you are so inclined to trade the short side of the market. The same rules apply.
All the best,
Adam
Adam,
Great rule, since it is so easy to follow. However, I'm not sure when to place the trade. Just prior to close on Friday or Monday's open.
Robert,
Your place betrayed on Friday close to markets close.
Here are the rules again:
Here are the three rules you need to trade "The 52-week new highs on Friday rule"
These are the exact rules that Bill used to make millions
Rule number 1: On a new 52-week high, when the market closes at or close to its high on a Friday, buy long and go home long for the weekend.
Rule number 2: Exit the long position on the opening the following Tuesday.
Rule number 3: If the market opens lower on Monday, exit the position immediately.
There you have it. These are the only three rules you need to trade with "The 52-week new highs on a Friday rule" successfully.
"The 52-week new highs on a Friday rule" works extremely well in futures and in the Forex markets. This rule can be reversed for "The 52-week new lows on a Friday rule" if you are so inclined to trade the short side of the market. The same rules apply.
All the best,
Adam
Will this work with equties too?
Curt,
Thank you for your feedback.
Yes it should work in equities that have good volume and good public following.
All the best,
Adam
I tried this with two stocks last February. One ended about even, up a tiny fraction, (and then took off) and the other ended lower over 1%. The market as a whole was about that, too. So I must have hit the exception to the rule.
Adam, does this rule also work for shorting futures/forex crosses making 52 week lows on a friday?
Charles,
The answer is yes. No guarantees though.
Adam
2010-06-19 - 0:05 (Germany)
Answer to: Comment by Ron H.2010-06-18 15:58:37
Hello Ron,
assumed that you want to say:
Should I still buy when the weekly high (Friday) is higher for the 10th, 20th, etc. week?
My personal answer is: It's only useful watching a commodity every week, and buy it after the FIRST SIGNAL the following week on Monday.
Jochen
Ron,
Thank you for your feedback.
Just count back 52 weeks. You can also use our SmartScan tool in MarketClub it will do the work for you.
All the best,
Adam
Hi Adam,
I'm trying out this trading model with a few shares of two gold-related stocks...DGP and GLD. I also bought small positions in a couple of equities that are at 52-week highs, to see if this technique has any traction with them. I'll let you know how it goes next week.
I do have one question about the dates and numbers in your video. I looked at both DGP and GLD for Sept. 4, 2009. If I understand your presentation, these two should have been at 52-week highs on that day, as they are both tied to spot gold. However, each of them was at a higher high on Feb. 20, 2009 than on Sept. 4, which would suggest that Sept. 4 was not a 52-week high. Am I overlooking something?
Your videos are great; many thanks.
jsaman
Jsaman,
Thank you for your feedback.
It is best to use spot gold as your indicator as the other markets tend to follow what is happening in that market. Sometimes they get a little disconnected but they will eventually follow the trend in the spot gold.
All the best,
Adam
Thanks. It's nice that the rule is short & simple. It does seem that when a ceiling is broken the market tends to keep going higher so I would support this theory in general but the "Friday" addition is new to me and might be a further confirmation of that trend. I will keep watching and see how this plays out in the current gold market. Thanks again.
Jean
Mr. Hewison
How do you know when a commodity is at a 52 week high? where is youe starting point.