Double 7s strategy

Why it works

In a long-term uptrend, short-term weakness tends to be bought. A close at the lowest level of the last seven days is such a dip.

The exit is just as mechanical: sell when the market closes at a seven-day high.

The rules

Setup

• Price above the 200-day moving average.

Entry

• Buy at the close when the market closes at a 7-day low.

Stop loss

• The original rules use no stop; a common addition is a close below the 200-day average.

Exit and management

• Sell at the close when the market closes at a 7-day high.

Filters that improve it

• Designed for broad stock indices; results on single stocks and forex vary.

Worked example

Illustrative US 500 example: the index is above its 200-day average and closes at 5,320, its lowest close in seven days. Buy at the close. Five days later it closes at 5,410, a 7-day high: sell.

Illustrative numbers, not a recommendation.

Common mistakes

• Using it below the 200-day average, where dips keep falling.
• Adding discretionary targets that cut the winners.

How to practise it

In Candlemind choose US 500 on the daily chart, mark the lowest close of the last seven candles and follow the rule exactly for 20 trades.

Pre-trade checklist

1. Price above the 200-day average
2. Close at a 7-day low
3. Buy at the close
4. Sell at a 7-day high close
5. Protective stop decided in advance

Frequently asked questions