What it does
It feels wrong to buy something at its highest price in months. Most people wait for it to come back down. Yet a share making new highs is one that people have been buying steadily, and more often than not that continues for a while. This strategy buys the new high and lets the continuation pay.
It sells the first time the price falls to its lowest level in two months. That is the sign the buying has stopped. It never tries to guess the top; it waits to be told.
How it makes money
Two conditions to buy: today's close is above the highest price of the previous 100 trading days, roughly five months, and the stock is above its 200-day average, so the new high is part of a longer rise rather than a bounce in a decline.
One condition to sell: today's close is below the lowest price of the previous 40 trading days. Between the two, a stop ten to fifteen percent under the entry guards against the breakout that fails immediately, and sizing keeps that stop to a fixed small fraction of the account.
A worked example, in rupees
Illustrative. ₹1,00,000 account, balanced version, a stock closing at ₹1,000 for the first time in five months.
- Entry
- ₹1,000, the new five-month high
- Stop
- ₹880, 12% below
- Risk budget
- 1% of the account, ₹1,000
- Position
- about 8 shares, ₹8,000, so the stop costs ₹960
- Exit four months later
- ₹1,145, the first close below its two-month low
- Result
- ₹1,160 before charges, about 1.2% of the account
The exit is well below the peak on purpose. A two-month low gives a rise room to pause without being sold, which is what lets a four-month trend be held in full; the cost is the last stretch of every rise, given back.
When it does well, and when it hurts
Does well when
- Rising markets with leaders: a few large companies making new highs month after month.
- Long, steady rises rather than sharp spikes that reverse.
Hurts when
- A breakout that fails: the stock makes a new high, turns, and hits the stop within days. This happens often and is the main cost.
- Range-bound markets, where new highs are rare and short-lived.
What the robot does when a trade goes wrong
These are the real rules, in the order the strategy checks them. Nothing here needs you to be watching.
- 1
Sells at a two-month low
The first close below the lowest low of the previous 40 days, whatever the profit or loss at that point.
- 2
Stops if the breakout fails
Ten to fifteen percent below the entry, sized so the stop costs the same fraction of the account every time.
- 3
Never more than 15% of the account in one company
Momentum clusters; the cap stops one sector becoming the whole account.
- 4
Buys again on the next new high
A company sold at a two-month low can be bought again the next time it makes a new five-month high, as a fresh trade.
Adjustments, and why it does not make them
The usual adjustment is to take profit at a round number or after a set gain. It turns a strategy built to hold winners into one that sells them early.
This robot has no profit target. It sells on weakness or on the stop, and only then.
The three versions
Each strategy comes as conservative, balanced and aggressive. They share the idea and differ in how much they risk once in.
| Setting | Conservative | Balanced | Aggressive |
|---|---|---|---|
| Companies | 10 large caps | 10 large caps | 10 large caps |
| Buys when | a new 100-day high, above the 200-day average | same | same |
| Sells when | the close falls below the 40-day low | same | same |
| Stop below entry | 10% | 12% | 15% |
| Risk per trade | 0.5% of the account | 1% | 1.5% |
Entry: When daily close breaks the 100-day highest high while holding above the 200-day EMA
Action: Buy delivery shares sized so the stop risks 1% of account equity
Exits: Hold without a profit target; sell on a close below the 40-day lowest low or a 12% stop
Want a stricter filter, a different stop, or your own stock list? Open a working copy in the builder and run a backtest.
Customize this ruleRisks you should know
- Many failed breakouts for each one that runs. The account can drift down for months between the winners.
- Long only. A falling market makes no new highs, so the strategy sits in cash, which is correct and dull.
- Overnight gaps can jump the stop.
The jargon, explained
- EMA
- An average of recent prices that leans towards the latest ones. Price above its EMA is drifting up; below, drifting down.
- ATR
- The typical size of one bar's move. Stops in these strategies are set a few ATRs away so ordinary noise does not trigger them.
- Delivery (CNC)
- Shares bought to hold overnight or longer, paid for in full. No shorting.