A Perfect Weekend for "The 52-week new highs on Friday rule"

Posted on by The INO.com Team

We published this trading rule on our blog almost 8 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 and you want gold to close at or near its highs for the day.

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

P.S. Here are the 52 WEEK 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.

38 thoughts on “A Perfect Weekend for "The 52-week new highs on Friday rule"”

  1. Why are there no posts since February? Would someone please inform us as to how well this has been doing? Thank you.

  2. I have started back testing and then paper trading this strategy in the stock market using these 3 rules. I am also trying to tweak it a little using other metrics like liquidity, specific industries like commodity financials sensitive stocks candlesticks, selling on mondays, and using stop losses. I will let you know my results near the end of feb 2011 since it was your site i first heard these rules on.

  3. Hi Adam, I just followed your advice and picked up an extra 10points on Gold.........THANK YOU

  4. Hi Adam,

    First time I heard about this “The 52-week new highs on a Friday rule”. Sounds interesting. Got to try it out. My question: why 52-week high be taken on a Friday? Am sure there are stocks that met the 52-week high on other days eg LVS today...monday.
    Does it mean that only on Fri this rule works successfully?
    Next question. When going long, I will scan for weekly triangles, then enter the trade, let it ride and exit for a 10% profit even without waiting for the daily red triangle. Sometimes the daily triangle may not tell the truth, it may turn green or red the following day.I mean green today and then tommorow it may turn red. Its really confusing.
    Next question. I sometimes get confused with 3-day high/low, 3 week high/low and 3 month high/low. Example,RIMM 3 months back (July) the highest price showed 58 and low 47.42. Aug high 58.64 and low 42.53. Why not July instead of Aug if we cal at 3-month?
    Is there anywhere in market club that I can get a better understanding of this? If there is a link pls provide so I can digest it. Imagine been using yr service for almost a yr yet still not too clear about it.

    Thank You so much for yr help.

    Cheers,
    Yinnie

    1. Yinnie,

      The reason we take positions on Friday when the market is making a 52 week high is that normally momentum builds up in those markets over the weekend and they follow through on Monday and Tuesday. Gold was a good example of this today.

      Here are the rules for trading stocks with the trade triangles.

      How "Trade Triangles" work in stocks.
      The major "Trade Triangle" to watch in trading stocks is the monthly "Trade Triangle" as this triangle determines the trend. We use the weekly "Trade Triangles" for timing purposes. Let me give you an example, if the last monthly "Trade Triangle" is green this indicates that the major trend is up for that stock. You would then use the initial monthly "Trade Triangle" as an entry point and use the weekly red "Trade Triangle" as a stop out point. You would only reenter a long position if and when a green "Trade Triangle" kicked in. You would then use a weekly red "Trade Triangle" as a stop out point. Providing that a monthly green "Trade Triangle" is in place the trend is positive for the stock. The reverse is true if a red monthly "Trade Triangle" shows that the trend is down. You would then use the weekly "Trade Triangle" for entering and exiting the market.

      All the best,
      Adam

  6. Hi Adam,

    Real time data would be needed to apply this technique in the last 5-minutes of trading. So is there any plans for market club to provide real time data?

    Thanks, Tim

  7. Hi Adam,

    Please, do you have an opinion on using the 52 Week Rule for trading FX?

    Best regards
    Nigel

    1. Nigel,

      Thanks for your feedback. I have use this rule in the FX markets and found it to quite effective.

      Cheers,
      Adam

  8. Be Sure to Backtest Before Using This Technique -

    Adam's video showed this technique working for sugar and gold this year. That's not the case for SPY -- S&P 500 ETF. Who knows for what else? This highlights the need to backtest for a sufficient time before commiting funds to any technique like this.

    Three occurrences for SPY so far in 2010:

    1/8 Friday Close 114.57 Tuesday Open 113.97 (Loss) Monday open 115.08

    4/9 Friday Close 119.55 Tuesday Open 119.62 (Gain) Monday open 119.70

    4/23 Friday Close 121.81 Tuesday Open 120.65 (Loss) Monday open 121.85

    Curiously, selling at the open on Monday would have resulted in gains all three times, and higher gains than under the sell on Tuesday open rule. It's problematical, and doubtful in my personal situation that after paying commissions and adjusting for risk that this techniques is worth the effort and commitment of funds, based on a 100 share trade.

    Techniques such as this are interesting, but BACKTEST! BACKTEST! BACKTEST!

    1. AlorChip,

      Good advice in terms of back testing. I am pretty sure that I said in the video and in later comments that this system works best in the futures and forex markets and not the indecies.

      Adam

  9. Thanks Adam,

    I would like to understand '52week high/low Rule' with an example...

    On friday, AUDUSD touched new 52week high @ 0.9745, but closed @ 0.9725, 20 pips/25% off its intraday high, which co-incidentaly is also below its prior days high of 0.9730.
    In this situation, is it an ideal trade to take, going by 52week rule, though it closed below 25% off its high, which is also a close below prior day's high or it would make it more ideal, if it had closed above prior days high & very close to its new 52week high, say about 5% or 10%? Should this closing 25% off its intraday high, which is also below prior days high, be considered or disregarded?

    About exiting on monday, should the position be closed, if it opens below its prior closing price or 52week high on friday?

    In your view, in this AUDUSD example, what would be an ideal trade?

    Your valuable thought on it is much appreciated..

    Regards
    Raj

    1. Raj,

      I would prefer to see a new high close into new high ground on the AUD.to take a long position.

      Here are the rules again:

      How to use trade triangles in futures and Forex.
      In the futures and Forex markets we use the weekly "Trade Triangles" for trend and the daily "Trade Triangles" for timing. Let me give you an example of how that works. If a green weekly "Trade Triangle" is in place it indicates that the trend is positive for that market. Initial entry point would be on the weekly green "Trade Triangle" and then you would use a red daily "Trade Triangle" as a stop. For example if the trend was up on the weekly you would exit a position on a red daily triangle. This is not to go short but only to exit the position and wait for the trend to reestablish itself on the upside. In the event the trend that does not reestablish itself and reverses with a weekly red "Trade Triangle" you would go short on the weekly "Trade Triangle" and use the daily "Trade Triangle"for money management and reentry points.

      Thanks,
      Adam

  11. Hi Adam,
    Really enjoyed this video o the 52 week high. After reading the comments it appears you feel this is only for use on futures?
    Maybe you could clarify what "vehicles" are appropriate for this trade technique? Stocks, commodities, index funds, individual stocks, etc?
    Thanks
    I am long GLD so I appreciated getting this.

  12. Re: The 52 Week rule: I have use this technique for several weeks even prior to becoming a member. It has worked 4 out of 5 weeks. I am new to trading, but this is how I implement this strategy. Any constructive comments would be appreciated. Here we go:

    First, do the scan. In this HFT and PPT market, I try to use small share prices so I can more bang for my buck. I only want 1-2% and I am out. Volume has to > 1,000,000 and I try to get issues with 2mil.

    Second, I then get the trade triangle number for each stock. Most will be 90-100.

    Third, I then go to clearstation.com where I find out the long/short ratio. If the ratio is slanted to the short side, then eliminated.

    Fourth, I then take a look at the RSI, Bollinger Bands,ultimate Oscillator, & MACD. Most of the time the stocks will be following the upper band, but I want to make sure. In terms of RSI, Ult. OSC, and MACD I look at the angle of the slope. Obviously the more vertical the slope the better.

    Fifth, I go to stock charts.com and take a look at the Point & Figure charts for each stock to determine where they are in terms of P&F rules.

    After making my selection I then enter about 5 positions into a real time portfolio service and then watch for the close making a buy right before the bell. I also try getting a discount after hours, but on a Friday not much to offer.

    Then I start watching futures on Sunday night and Monday morning to determine my stop out positions.

    Finally, I drink a beer and flip a coin to see how lucky I will be.

    Let me know if I need to add or change up on something as I gracioulsy accept all comments.

    JC

  13. Adam,

    Do you have an opinion on using this "New Highs on Friday" technique on high volatility individual stocks?

    1. AlorChip,

      Thank you for your feedback.

      I'm not sure how it works with high volatility stocks, however, I know it works very well with futures. Perhaps if you have any research on that you would like to share it with ourl members.

      All the best,

      Adam

  14. Hi Adam,

    Thanks for your very useful trading tips...always..!
    Going by 52week high/low rule, as friday position needs to be closed on tuesday @ the opening....what would be the opening time (GMT or New York) on tuesday for forex, as forex is traded 24hours?

    Regards
    Raj

    1. Raj,

      That is a very useful question and I'm sure many of our members were thinking the same thing. I would close out this position at the beginning of real trading around the 8 AM Eastern standard Time. That is pretty much where the serious money comes into the markets.

      Hope this helps,
      Adam

  15. It will be interesting to watch this play out. Adam, how does this apply to people who have already been long for this whole run up? In other words, should longer term traders be tightening stops in anticipation of a sinificant correction next week, or is this just a short term play?

    thanks 🙂

    1. Bob,
      There are two types of traders, those that are short-term which this rule would not apply to and those who trade longer-term. If you're in the gold market with a long position there is no indicators to suggest you should take profits at this time.

      All the best
      Adam

    1. Guy,

      The short answer is no. It would be an interesting exercise to do so. However, I have used this technique many times successfully. I have also seen it used by some very large traders with great success. That does not mean that every trade is successful.

      Adam

  18. i have been fortunate to have a large position in vhc and if i followed your advice i would have missed out on a huge upside move . do you have any stats that show the coming decline you suggest ? i always get a bit uncomfortable in a one size fits all approach .

    1. Bob,

      Thank you for your feedback. I'm not sure I quite understand what you mean as I just looked at the charts and according to our Trade Triangles we caught the move. The last buy signal we had was on July 28 at $6.48, the markets currently trading over 15. I also would like to point out that our first by signal on this stock came in on February 17 at $4.09.

      Bob, I am not sure that you are using our service for stocks the way it was designed to be used. I am okay with that but I think you would derive greater results if you looked and used our Trade Triangle Technology. Here are the rules we use for trading stocks.

      How "Trade Triangles" work in stocks.
      The major "Trade Triangle" to watch in trading stocks is the monthly "Trade Triangle" as this triangle determines the trend. We use the weekly "Trade Triangles" for timing purposes. Let me give you an example, if the last monthly "Trade Triangle" is green this indicates that the major trend is up for that stock. You would then use the initial monthly "Trade Triangle" as an entry point and use the weekly red "Trade Triangle" as a stop out point. You would only reenter a long position if and when a green "Trade Triangle" kicked in. You would then use a weekly red "Trade Triangle" as a stop out point. Providing that a monthly green "Trade Triangle" is in place the trend is positive for the stock. The reverse is true if a red monthly "Trade Triangle" shows that the trend is down. You would then use the weekly "Trade Triangle" for entering and exiting the market.

      All the best and I am happy to hear that you are doing well with VHC.

      Adam

  20. Regarding the 52 WEEK RULE, How to you trade a stock after the market has closed on the new 52 week high Friday? Am I to assume that one is trading in the after hours market.

    1. BobD,

      You can enter an order about 5 minutes before the close providing that the market is close to its highs for the day.

      All the best,
      Adam

  21. Adam, I wondered about your thoughts that when using this technique,how much difference it makes selling on open Tuesday versus selling into the close Monday. One reader commented on successfully using your technique but selling Monday afternoon since he had a good quick profit and took it. I understand the "if its high on Friday that's a sign buyers believe in the stock since they are willing to hold it over the weekend" but was not sure about the sale on Monday close versus Tuesday open.

    Just did a scan and would alert everyone to keep an eye on ADTN, which hit a 52 week high today.

    Thanks for passing on the tip and your help with using it.

    1. Red42,

      thank you for your feedback and your input. Taking a profit Monday afternoon would not be the worst thing one could do. It would be great if you could follow up on the blog with your ADTN which made a 52 week high on Friday.

      Hope it works out for you.

      All the best,
      Adam

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